Time-bound mechanism for listing of CPSEs

After 165 days of their agreement for an IPO of equity, the issue will hit the markets

To achieve the ambitious disinvestment target of Rs 70,000 crore for 2017-18, the government will prepare a list of central public sector enterprises (CPSEs) which would be listed on stock exchanges within a month of finalising their audited accounts for 2016-17. 

The list of eligible candidates will be prepared by the nodal ministry or department, with the department of investment and public asset management (DIPAM). After 165 days of their agreement for an initial public offer (IPO) of equity, the issue will hit the markets, according to indicative time-lines given by DIPAM on Friday. 

The Budget for 2017-18 said a mechanism and procedure for listing of CPSEs would be put in place. The eligible candidates must have a positive net worth, no accumulated losses and net profits in the three preceding years. If the government stake is to be sold through listing, DIPAM will take approval from the Cabinet Committee on Economic Affairs (CCEA). If new equity is to be brought in with the government stake sale ('piggy-back transactions'), CCEA approval will be obtained by the nodal ministry or department. 

A 12-member inter-ministerial group will then be constituted under the chairmanship of DIPAM's secretary for the appointment of advisors, intermediaries and to guide the process of disinvestment through the public offer. 

The process for appointment of advisors for the transaction, including merchant bankers, book running lead managers and legal advisors will be completed within a period not exceeding eight weeks from the date of constitution of the group. 

Then, an empowered committee (EC) will be constituted at the level of the nodal ministry or department, with the mandate to complete time-bound documentation of the draft prospectus. This has to be finalised and filed with the Securities and Exchange Board of India (Sebi) within 105 days of the agreement for an IPO. Within 30 more days, resolution of Sebi comments have to be completed and the prospectus filed. In another 30 days, the IPO has to hit the market.  

According to existing divestment policy, CPSEs having a positive net worth, no accumulated losses and having earned net profits in the three preceding years are required to have at least 25 per cent public holding.

New Norms Ahead

Budget said a mechanism and procedure for listing of CPSEs would be put in place

Eligibility

• Must have a positive net worth
• No accumulated losses  
• Net profits in the three preceding years