Centre Blamed For Poor Response To Psu Floats

Key investment bankers and merchant bankers have squarely blamed the union government for the poor response to the PSU disinvestment programme through domestic offerings.

Marketmen, who had gathered at the Invest India summit yesterday, said too much emphasis had been placed on the 'price factor' for these offerings affecting their performance and appetite at the markets.

The Securities and Exchange Board of India(SEBI) executive director Vijay Ranjan said the regulator was concerned about the PSUs going in for disinvestment and certain problems had been identified in three areas: lack of information, credibility of accounts and the lack of concern for the market conditions.

"One of the problems often identified is the bureaucracy just does not wish to let go of the powers they hold. Investment bankers, auditors and the information made available to us regarding PSU offerings is dictated by the government," Ranjan said.

Shitin Desai, vice chairman, DSP Merrill Lynch, said that it had become critical that the PSU offering should be made for the local investor. "After all who does the PSU belong to? There could slowly be a scenario where the Indian capital markets operates out of London and New York.'' Euan McDonald, chairman (India) of investment bank SBC Warburg, reiterated this view stating that at Eastern European markets, shareholders of the privatised companies were largely local investors.

Shaun Browne, chief executive officer, HSBC Capital Markets India, said that the government should move out of the market pricing of issues. "They should rather aim, as in the British privatisation programme, to bring out quality issues at ''attractive prices where local investors are allowed to make money and crucially, come back to invest in future such offerings,'' he said.

K R Bharat, managing director Credit Suisse First Boston, said the centre should first play a greater role in reforming the sector within which offerings are to be made. "The government is to blame for the lack of interest witnessed, when PSUs move in for offerings. Some of these offerings have prices which do not reflect the real value as they are highly illiquid.''

He said that the government role as a shareholder should end when they decide on the divestment, following which the management of the company and the disinvestment commission should handle details relating to the issue. Officials from the Gas Authority of India(GAIL) and MTNL made presentations, pointing to the features involving overseas offerings and the success seen in recent issues.