Govt to Raise Rs 2,000 Cr from NHPC Disinvestment...

 

Government expects to raise about Rs 2,000 crore through disinvestment of state-run hydro power producer NHPC, Parliament was informed today.

"The Government of India is likely to realise an amount of approximately Rs 2,000 crore from NHPC buyback offer," Minister of State for Finance J D Seelam said in a written reply to the Lok Sabha.

The board of the state-run company has approved buying back of 10 per cent of total shares or over 123 crore shares on a proportionate basis from shareholders, at a price of Rs 19.25 apiece.

The government holds 86.36 per cent stake in NHPC. Seelam said the Empowered Group of Ministers (EGoM) on disinvestment has decided to tender shares up to the size of the buyback proposed by the company.

The buyback which opened on November 29 closed on December 12. The entire process would be completed by January 7, 2014, Seelam said.

Under the buyback mode, the government can raise money by selling its equity in the company to the PSU itself.

The government aims to raise Rs 40,000 crore through PSU disinvestment in the current fiscal. So far this fiscal, it has managed to garner about Rs 3,000 crore through PSU stakesale.

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PMO to meet Coal Ministry this week on Coal India disinvestment...

 

The Prime Minister's Office has called a meeting this week with the Coal Ministry to discuss issues pertaining to disinvestment in Coal India Ltd, ahead of the proposed 3-day strike by CIL union against the government's stake-sale plan.

"The Prime Minister's Office has called a meeting this week to discuss CIL disinvestment," said an official.

Various aspects of the disinvestment are likely to be taken up, including the proposed strike that was deferred to December 17 from September 23, he added.

The official declined to comment on as to who will chair the meeting. He also said that a call is yet to taken on who will represent the Coal Ministry at the meeting.

Taking ahead the proposed stake sale in CIL, government has already held roadshows in two phases in Singapore, Hong Kong, Australia, Germany and UK.

According to the official, although these were non-deal roadshows, "the response has been good".

Commenting on the mood of investors with regard to the roadshows, Coal Secretary S K Srivastava had earlier said: "It is a very sound company with strong fundamentals and they have appreciated various aspects of operations and functioning of Coal India."

The Department of Disinvestment originally planned to sell 10 per cent stake in CIL, but faced strong opposition from employees' unions as they threatened to go on strike.

Meanwhile, Coal Minister Sriprakash Jaiswal had said that the disinvestment might take place in November or December.

Coal India was listed on the stock exchanges in 2010 after an initial public offer through which the government raised Rs. 15,199 crore by selling a 10 per cent stake. The company has a cash balance of over Rs. 60,000 crore.

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Good FII response to Coal India, IOC stake sale, say bankers...

 

The Indian government’s disinvestment drive is set to get a boost with at least three big ticket divestments lining up in the next few weeks. Bankers say they have received good response to the road shows held abroad for Coal India, Indian Oil and PowerGrid.

Of this, Coal India will be the first to hit the market with a 5% dilution of Indian government’s 90% stake in the company.  PowerGrid’s Rs 7,500 crore stake sale will take place by the first week of December while Indian Oil disinvestment will take place by mid-December. The final call on the pricing and timing will be taken by the government.

In his budget announced in February this year, the finance minister P Chidambaram had set an ambitious target of Rs 55,000 crore by selling part of government’s stake in public sector units. But till date, the target is far from being met due to volatility in the Indian currency. Bankers hired by Indian government are now meeting investors across the world to gauge their mood and sell the shares.

“We have received very positive response from investors abroad and there is a demand for Coal India and Indian Oil paper,” said a banker close to the development. Not only the shares of these companies have gone down substantially, a weak rupee will help foreign investors to buy shares in these companies, bankers say.

The road shows were held in Singapore, Hong Kong, UK and Germany. “As long as the government leaves something on the table for the investors, they will be keen to invest,” said the banker. “All meeting halls were full of investors abroad thus showing that there is a demand for the company’s shares.

Investors are also enthused by the fact that Coal India shares which closed at Rs 272 on the Bombay Stock Exchange on Wednesday – are down 5% in the last one month. The stock is down 23% since January this year even as the BSE Sensex was up 7% during the same period.

A 5% stake sale will help the government to raise close to Rs 8,600 crore.  Bankers say typically shares of a company slated for disinvestment falls sharply as investors try to take advantage of a discount which the government offers before the offer opens.

The road shows for Indian Oil to sell 10% of Government stake is also on overseas with the government planning to raise close to Rs 4,900 crore as of today’s closing of Rs 201 a share.

Up for sale
Company	Stake (in %)	Stake value
IOC	10%	Rs 4,900 cr
Coal India	5%	Rs 8,600 cr
PowerGrid	17%	Rs 7,500 cr*
Hindustan Zinc	29.5%	Rs 21,600 cr
* includes fresh issue of shares

“Both Coal India and Indian Oil are large cap names and their fundamentals are strong. Hence, it will not be a problem selling the issue, “a banker said. IOC is also down 25.5% since January this year and FIIs are keen to invest in the company, bankers said.
The follow-on offer of Power Grid Corporation will open in the first week of December to raise close to Rs 7500 crore. The government will disinvest 4% of its 68% stake. It will also issue fresh equity of 13% of existing capital.  Powergrid is also down 19% since January this year.

Bankers say the government’s stand on selling its residual share in Hindustan Zinc and Balco worth Rs 24,000 crore is important as it will help it to meet its divestment target. But the controversy over mines ministry’s objection that HZL sale can take place only after the approval of the Parliament is delaying the process. The access to cash worth Rs 21,000 crore in HZL’s balance sheet is an important reason why Vedanta is keen to buy government’s stake in the company.

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Road shows by IoC & Coal India in Singapore and Hong Kong over Indian power sector including renewable energy...

 

This week you may spot some of the top executives of two leading PSUs Indian Oil Corp (IOC) and Coal India Limited (CIL) in the financial hubs of Hong Kong, Singapore and Australia. After wrapping up successful road shows in the US and the UK, government will organise road shows in Singapore and Hong Kong this week to gauge the appetite of the investors in bid to sell its 10-percent-stake in nation's largest oil company.

They will try and sell the IOC stake sale, which is important for achieving government's investment target of Rs 40,000 crore. The proposed issue of 19.16 crore IOC shares is likely to fetch as much as Rs 3,900 crore at current prices.

At the road shows last week, IOC was projected to investors as "The Future of India Energy." Such road shows are organised basically to apprise the prospective investors about the investment potential in the company. In the presentation meant for the investors, IOC was shown as the largest refiner in the country which has "Strong support from the Government of India" and is "Driven by a Management Team that has Delivered Results."

IOC has 10 refineries with 65.7 million tonnes of crude oil processing capacity, which constitutes 31 percent of the domestic refining capacity. It has 11,000-plus km of crude oil, product and natural gas pipelines and a 44 percent fuel market share. IOC is also the second largest petrochemical firm in the country after Reliance Industries.

The presentation further said that IOC is expanding its footprint in oil and gas exploration, LNG, wind and solar power besides venturing into nuclear energy to become an integrated energy firm. IOC, it said, is investing $2.077 billion in core business of oil refining and marketing and petrochemicals and has plans to invest $2.448 billion in the next. It has an capital outlay of $2.09 billion for 2015-16 and $2.009 billion for 2016-17.

IOC chairman RS Butola had just before the US and UK roadshows said that the department of disinvestment (DoD) would like to assess the market conditions at the roadshows and will take a view on the stake sale based on the response.
The company was of the opinion that the government should not launch the stake sale now as the company share price is "unduly depressed".

Government holds 78.92 percent stake in the country's largest oil refiner as on June 30. The PSU’s shares have recently seen a surge of Rs 15-20 per share. This follows the recommendations of the Kirit Parikh committee on fuel pricing that proposes a hike of Rs 5 per litre in diesel prices and Rs 250 per cylinder in LPG.

The department of divestment had earlier postponed the stake sale of IOC in October following opposition by the oil ministry. The ministry thought the market conditions were not conducive for disinvestment. Currently, the government holds a 78.92-percent stake in the oil major. Five merchant bankers — Citibank, HSBC, UBS Securities, SBI Capital and JM Financial — have been appointed to look after the stake sale.

The government has so far raised Rs 1,325 crore from divestments in MMTC, Hindustan Copper, National Fertiliser, ITDC, State Trading Corporation and Neyveli Lignite. Power Grid, NHPC and Engineers India have also been lined up for divestment in 2013-14.
Meanwhile, buoyed by the enthusiastic response from the investors in the road shows last month, government will also hold road shows in Hong Kong, Singapore and Australia from November 18-26 ahead of its plan to sell a five percent stake in Coal India. The government organised road shows for the world's largest coal producer last month in five countries, including Germany and the UK. Commenting to the response of investors to the road shows, coal secretary SK Srivastava had said, "It is a very sound company with strong fundamentals and they have appreciated various aspects of operations and functioning of Coal India."

The stake sales in Coal India and IOC are crucial for the government to meet the divestment target of Rs 55,814 crore for 2013-14. The department of disinvestment originally planned to sell a 10 percent stake in Coal India, but due to stiff protest from employees unions as they threatened to go on strike.

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Roadshows for Coal India's 5% stake sale begin...

 

Coal India  is the biggest loser on the Nifty, shedding around 1 percent in intraday on Monday. The world's largest coal miner starts off its second round of roadshows for the 5 percent stake sale and will continue till November 26.

The government will hold roadshows in Singapore, Hong Kong and Australia from next week.

Earlier, investors have expressed concern over the lack of an appropriate regulatory regime for the sector as well as the long pending restructuring of this public sector behemoth. Investors are particularly concerned over the pricing power of Coal India and what impact the proposed regulatory architecture would have on that ability.

The stock had fallen around 5 percent on Thursday after reporting September quarter results. Its consolidated net profit dropped to Rs 3,052.36 crore for the July-September quarter as expenses rose. posted a profit of Rs 3,078.08 crore in the second quarter a year earlier.

Net sales rose 5.75 percent to Rs 15,411.49 crore from Rs 14,572.54 crore. At 10:55 hrs, the stock was quoting at Rs 271.95, down Rs 2.50, or 0.91 percent on the NSE.

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