Govt eyes Rs 10,000-cr divestment by Nov

NMDC and Nalco share sales scheduled to hit the market next month

Even as investors await the commencement of the Centre’s Rs 30,000-crore disinvestment programme, the government has told intermediaries it would complete share sales in two resources firms in November, and in two others in December.

These would follow the Rashtriya Ispat Nigam Ltd (RINL) initial public offering (IPO) expected to hit the Street later this month.

According to a request for proposals (RFPs) floated by the Department of Divestment, the sale of 10 per cent stake in NMDC, expected to rake in about Rs 7,675 crore at current prices, “is proposed to be completed in November 2012”. In RFPs to legal advisers, the department has also stated the sale of 12.5 per cent stake in Nalco, expected to garner about Rs 1,650 crore, is proposed to be completed next month.

Divestment of stake in Oil India, scheduled for December, is likely to fetch about Rs 2,880 crore (considering today’s prices). The sale of five per cent stake in Neyveli Lignite (likely to fetch Rs 750 crore) is also slated for December.

The timeline provided to legal advisers is aimed at assessing their ability to commit resources at short notice. The advisers have to “demonstrate the ability to deliver, in accordance with the timetable requirement, and the ability to commit key personnel for the entire duration of the transaction”.

This would account for 10 of the 100 points in the technical bidding process for selecting advisers.

The government also plans to offload stake in MMTC. However, it is yet to give any indicative timeline for the sale.

The sale of stake in the five public sector undertakings (other than RINL) would be carried out through offers for sale on stock exchanges, which ensures quick and efficient sales.

The government plans to meet about half its disinvestment mop-up target for this financial year by the end of this year.

It aims to cash in on the positive market sentiment provided by copious fund flows from foreign institutional investors and complete a significant portion of the disinvestment process by Diwali (November 13). In 2010, it had completed the mammoth Rs 15,000-crore share sale in Coal India just before Diwali.

Market participants are bullish on the government’s stake sale programme. The NMDC stake sale has received good response from merchant bankers (both domestic and foreign), with 16 top bankers queuing up for the sale. Goldman Sachs, Morgan Stanley, DSP Merrill Lynch, Kotak, Citi, SBI Caps, Enam and ICICI Securities are among the investment banks scheduled to make their presentations to the ministry on Wednesday.