 "Arunish Chawla, Secretary, Department of Investment and Public Asset Managemen (DIPAM)")
The complex and multi-stage process in the strategic disinvestment of IDBI Bank is taking time, but the government remains committed to the transaction, Department of Investment and Public Asset Management (DIPAM) Secretary Arunish Chawla said in an interview with Harsh Kumar and Asit Ranjan Mishra at his office. In a wide-ranging interview, Chawla said that while defence stocks have been doing well in recent days, more listings of government-owned defence companies will be considered carefully, in a calibrated way, in consultation with the defence ministry. Edited excerpts:
The markets have recovered strongly. Does that boost your confidence for more listings and stake sales this year compared to 2024–25?
Absolutely, the stock market is back to its previous levels. Market participants tend to look ahead, and current activity is quite encouraging. That certainly gives us confidence to pursue more listings through offer for sale (OFS), more institutional placements, and more follow-on public offers this year. We hope that dividend payouts by public sector enterprises will be even better. We want public enterprises to be role models in the stock market.
When it comes to fresh listings, do you have a number in mind?
It is Finance Minister Nirmala Sitharaman’s desire that we share the value of public enterprises with ordinary citizens and common investors. We will adopt a strategy where we do stake sales in small tranches and do it regularly so that small and individual investors get an opportunity to partake in this endeavour. We would like to give this forward guidance to ordinary investors that they should look out for official announcements.
Public stocks are a very good hedge in anyone’s portfolio because the government is behind them. We enforce fair dividend norms very strictly. It will be our constant endeavour throughout the year to come out with OFS and market sales in small tranches so that small investors can participate. We will also keep greenshoe options regularly so that all small and individual investors interested in public stocks get a share of the buy.
Do you have some numbers in mind? How many listings?
We have developed an in-house DIPAM model, which is a policy model used for market research. The model has four blocks: corporate performance linked to dividends; fair dividends linked to market price; market price; and value helps to decide what and when to sell. It is guided by that model, so no one can ex-ante give a fixed number.
But we would like to make it known to all investors, particularly small investors, that we’ll be coming up with OFS regularly in small tranches. So whenever we make announcements, please be on the lookout and make good use of that opportunity.
What is the status of stake sale in public sector banks (PSBs) and financial institutions for which expression of interest was sought from transaction advisors?
We have announced disinvestment of minority stakes in five PSBs to bring them down to minimum public shareholding norms. We received an enthusiastic response. All those applications have been evaluated, presentations held, and those making the cut have been empanelled. They have been suitably categorised, and going forward, they will become part of individual transactions.
Who all were selected?
About a dozen merchant bankers have been approved for these financial transactions. They are all big names in the market, but I would not like to mention them as it is not yet in the public domain. Their names will be revealed in due course. Approvals have just come in.
On minimum public shareholding (MPS) norms — August 2026 is the deadline. How many central public sector enterprises (CPSEs) will meet the target?
Most CPSEs have now reached the MPS norm. A few, maybe in defence, railways, or the financial sector, are left out. We are actively pursuing their disinvestment. Hopefully, within the next one year, we would like all of them to achieve MPS norms. That is critical because it helps create sufficient stock and float in the market. The pricing decision is better, and the market discipline on behalf of the enterprise is also better.
Will you be able to dilute more than 20 per cent stake in the five PSBs within a year?
Yes, we are on the job. That is our target and commitment. That is why we issued a special request for proposal and empowered merchant bankers so that we go ahead and do it within the window available.
What's the status of Life Insurance Corporation of India (LIC) stake dilution?
LIC has been listed. We have disinvested 3.5 per cent so far. We will be going further. LIC is a hugely valued company. We will do this disinvestment in small tranches so that it is in accordance with the liquidity in the market, and we give the small investors a fair chance to participate.
You need to dilute 6.5 per cent more by May 2027 — will it be split equally between this and next year?
Yes, you can expect that we will be doing it in small tranches. When we announce an OFS, the time is short due to the Securities and Exchange Board of India’s limited window. So we would like to give forward guidance to small investors that we’ll be coming up with OFS in multiple small tranches this year and next. So be on the lookout and keep some of your savings aside so that you can pick up public sector stocks.
Will each tranche be 0.5–1 percentage points or even less?
We track markets on a daily basis and measure the certificate of deposit volume of transactions. Based on that, we tailor the size of a tranche.
Given rising economic uncertainty and expected economic slowdown, do you expect more pressure on DIPAM to garner funds for the government this financial year?
Markets are smart and have already looked through that, which is why they bounced back. Market conditions are favourable. Our strategy is to continuously do better. There is no official disinvestment target. But in asset management, dividend payouts, and asset sales, we hope to do better than last year and hope to give those revenues to the government so that the government's fiscal glide path is on track.
Defence stocks have done well in recent days. Can we see more stake sales in defence CPSEs?
Our defence sector’s performance is a matter of national pride. We want to share this value with small investors. Market discipline helps enterprises become export competitive and generate foreign exchange for research and development. This is a moment of great pride and a moment of great opportunity — that our defence enterprises have produced world-class products, have saved the country against adversaries, and have beaten the best in the world.
Can more defence PSUs be listed?
That has to be done strategically. Defence is a strategic sector. It cannot be treated as any other CPSE in the pharmaceutical or industrials sector. It has to be done carefully, in a calibrated way. The finance and defence ministries will work closely together to decide the optimal strategy going forward.
What is the update on IDBI Bank?
We are committed to the strategic disinvestment of about 30 per cent each by the government and LIC in IDBI Bank. It’s a multi-stage process. The transaction advisors and the legal experts are on the job. We have established a data room. We are sharing all the required information. We are working on the legal documentation, including the shareholders’ agreement. It's complex and time-consuming, but we are working hard, and it is on track.
Will it be completed this financial year?
You will hear the news when it comes.
What is holding it back?
There is no hold-back. There is a positive expectation. The process is complex. Therefore, it takes time. We want to be sure we don’t make any mistakes. We are working hard and committed to implementing the decision.
What mistakes are you trying to avoid?
We are being careful and cautious that every step is done professionally, in accordance with the framework.
Is privatisation off the table now?
We follow a composite strategy consisting of corporate performance, fair dividends, calibrated disinvestment — which includes minority stake sales, listings, closure, consolidation, strategic disinvestment. It’s a sector-specific optimisation framework.
After you urged mutual funds (MFs) to add public sector undertaking (PSU) stocks, did they approach you?
We will do roadshows this year, engaging with MFs, private equities, pension funds, and research houses. We will share performance and value creation strategies and nudge them to include PSU stocks.
What about capital expenditure (capex) by CPSEs this year?
CPSEs achieved last year’s capex targets. This year, they are expected to invest ₹3.5 trillion. We have started the review for capital management with large PSUs. We are doing it early this year so that everyone is sensitised and they achieve the target that has been projected in the Budget.
Recently, you nudged listed private companies to give more dividends to the shareholders. That surprised many. What was the thinking behind it?
We have not taken any coercive steps. We have not forced regulation on anyone. It is moral persuasion. DIPAM research shows that public enterprises, on a weighted average basis, distributed 10 percentage points more dividends than Nifty 50 companies. Dividends belong to investors, and reserves belong to the promoters. We stand by the small investors. It is our job to educate the small investors and market participants and make them aware. We consciously and deliberately follow a fair dividend strategy, and it is our job to make it known to one and all.
