Concor, Vsnl Gdrs Put On Hold

Container Corporations global depository receipts issue has been put on hold for the time being, even as the government is poised to postpone another international offering by Videsh Sanchar Nigam Ltd (VSNL), despite the fact that the companys GDR is ruling at a premium of more than 30 per cent to the domestic price.

A decision on Concor is expected in the next couple of days, a finance ministry official said. The core group of secretaries under the chairmanship of cabinet secretary TSR Subramanian, which met twice on Monday, was unable to arrive at a decision. In fact, the cabinet secretary held informal meetings on Tuesday with core group members but was unable to make any headway.

 

Sources revealed that the matter was deadlocked, with one section favouring divestment to help contain the fiscal deficit and another opposing it on the ground that the pre-market survey had shown that investor demand was not forthcoming.

Although government officials declined to divulge details, they conceded that there was a problem with the issue.

The roadshows were originally scheduled to start from February 2, but were deferred as the core group could not take a decision on the issue.

Concor officials conceded that the GDR would be rescheduled but were hopeful that it would take place during the current fiscal.

The Concor divestment entailing offloading of 10 million shares by the government and an initial public offering of 2 million shares by the company is being lead managed by J P Morgan and co-lead managed by SBC Warburg and HSBC. The government was expecting to rake in about Rs 400 crore from the issue, given the current market price of the scrip.

Government sources also revealed that VSNLs proposed GDR will not take place until the general elections are over.

The decision to postpone the offering has been reportedly prompted by the Disinvestment Commissions report that the timing of the proposed GDR offering was not right.

If the government still wanted to go ahead with the disinvestment, it should do so at a premium to the current GDR price, the commission said.

Sources said this might be difficult to achieve in the current scenario. The VSNL GDR (equivalent to half a domestic share) has been hovering at $11.75 a premium of more than 30 per cent to the domestic price of about Rs 700.

The government had budgeted accruals of Rs 7,100 crore this year from disinvestment in public sector enterprises, of which only Rs 2,400 crore has been raised so far. Of the Rs 2,400 crore, some Rs 1,500 crore was raised through divestment of 15 million government shares in March last year.

Another Rs 900 crore was remitted to the government after a divestment of 40 million shares in Mahanagar Telephone Nigam Ltd. The government, which currently holds 66 per cent in VSNL, was planning to raise some $200 million (Rs 780 crore) from the proposed offering.