Panel Set Up To Finalise 2nd Round Of Vsnl Selloff

The Union government has set up a five-member task force to finalise its second tranche of disinvestment in Videsh Sanchar Nigam Ltd (VSNL, the country's international telecom carrier) sending a signal that it may opt for a fresh beauty parade to select global coordinators to the global depository receipts (GDR) issue.

Sources said the government had shortlisted S Talwar, joint secretary, department of public enterprises; Sundaresan of the ministry of finance; Amitabh Kumar, acting chairman and managing director of VSNL; and B R Khurana, a department of telecommunications (DoT) official and a director on the board of VSNL to be members of task force. The name of the fifth member could not be confirmed, but sources said it could be S D Purwar, a senior DoT official.

 

The government move to set up a new task force may upset the plans of Kleinwort Benson, Salomon Brothers and Jardine Fleming _ the global coordinators to the VSNL first GDR issue last March _ which were expected to be retained to lead manage the telecom carrier's forthcoming issue.

The issue size has not been finalised yet, but even at Rs 700 crore it could translate into fees of some Rs 15 crore.

Said an investment banker, "There is a feeling in the government that the issue size does not warrant the appointment of three global coordinators may not be necessary given the (reduced) size of the issue."

The value of the proposed VSNL issue has been scaled down significantly following a drop in the scrip price. The share has been hovering around Rs 800-825, down some 18 per cent since its GDR issue last year. The government garnered Rs 1,500 crore in the issue divesting 15 million shares.

Sources also added that VSNL may go ahead with a share offering to employees along with the proposed GDR issue. It has earmarked some 600,000 shares to be sold to employees, the pricing of which has not yet been finalised.

Investment banking sources said the proposal to retain Kleinwort Benson, Salomon Brothers and Jardine Fleming as the global coordinators to the VSNL offering was mooted in January this year to ensure that the proceeds of the issue accrue in fiscal 1007-98 itself.

The government, which holds 65 per cent of the Rs 92-crore equity of VSNL, wanted the proceeds of the proposed GDR issue to come into its kitty in 1997-98 itself to meet the shortfall in its disinvestment target.

The government had targetted Rs 7,000 crore in the 1997-98 budget to come by way of disinvestment proceeds.

Among the other proposed government offerings this year are those in Indian Oil Corporation (IOC), Gas Authority of India Ltd (GAIL) and Concor. The government had to withdraw the GAIL GDR offering in November last year after poor response from potential investors.