Govt invites bids from advisers for selling 26% in BEML

Government has kick-started the process of strategic sale of 26 per cent equity in BEML, inviting bids from advisers on the issue.
The selected adviser would be required to manage the bidding process and assist government in fixing the range of the fair reserve price while considering the valuation of BEML -- the heavy equipment maker with presence in various sectors including defence.
"The Government proposes to engage Transaction Adviser from a reputed professional consulting firm, investment bankers, merchant bankers, financial institutions, banks. For providing Advisory services and managing the disinvestment process," the Department of Investment and Public Asset Management (DIPAM) said while inviting bids.

Government holds 54.03 per cent in BEML and it intends to sell 26 per cent stake to strategic buyers. At the current market price of Rs 1,158.65 apiece, the stake sale would fetch over Rs 1,200 crore.
The valuation of the PSU would be based on the methods like discounted cash flow, relative valuation; and asset based valuation, it said.
Merchant banker/financial institution having experience of at least 5 years for providing advisory services for strategic disinvestment/strategic sale/M&A activities/ private equity investment transaction can put in their bids by February 15.

Bidders should have advised, handled and successfully completed at least one transaction of strategic disinvestment/ strategic sale/M&A activities/private equity investment transaction of the size of Rs 1,600 crore or more during the period from April, 2014 to December, 2016, said the bid document.

If the strategic sale goes through, BEML will be the first privatisation since sale of Jessop and Co in 2003-04 under the NDA government headed by Prime Minister Atal Bihari Vajpayee.
Established in May 1964, BEML operates on three major business verticals for associated equipment manufacturing -- mining and construction, rail and metro and defence and aerospace. Its turnover has risen to more than Rs 3,500 crore.
The PSU, under the administrative control of defence ministry, provides equipment support to Indian Army and other defence forces by manufacturing variants of Tatra vehicle for all terrain operation.
It also supports the aerospace operations by supplying ground support equipment such as Aircraft Towing Tractor, Multi Purpose Weapon Loader and Crash Fire Tender.

The government is targeting Rs 56,500 crore in disinvestment proceeds this fiscal. Of this, Rs 36,000 crore is to come from minority stake sale in PSUs and another Rs 20,500 crore from strategic stake sale.