To increase retail participation in PSU stake sale, the Department of Disinvestment is contemplating an aggressive strategy to encourage more people to open demat account and reduce the time taken for the same.
“We will meet SEBI to see if the time-frame for the opening of demat account can be reduced. It will help new retail investors to apply in the upcoming PSU disinvestments,” a government official said.
At present, it takes at least 3-5 days for a person to have an operational demat account, which is a must to buy, transfer or sell shares or other securities held in the electronic format.
There are over 2.30 crore demat accounts in the country.
“One of the suggestions that we are looking at is an aggressive strategy for creating awareness among retail investors to participate in PSU stake sale,” the official added.
To attract more retail investors to PSUs, the government has already doubled the quota for such investors in PSU stake sale to 20 per cent of the issue size, from 10 per cent earlier.
Retail investors, defined as those who can invest up to Rs 2 lakh in a public issue, get a price discount of 5 per cent in such issues.
The recently held disinvestment of 10 per cent shares in state-run behemoth Coal India garnered Rs 22,577 crore for the government, but its success was largely driven by domestic institutions, like LIC, and some foreign funds, while the retail quota remained under-subscribed at 44 per cent.
This was despite the 20 per cent reservation and five per cent price discount given to such investors.
Retail investors put in bids worth Rs 1,852.55 crore during the one-day offer-for-sale of Coal India shares. This amounted to less than half of 12.63 crore shares reserved for them, but still it is the highest so far for an OFS.
However, in a relatively smaller offering of SAIL in December 2014, retail investors lapped up the shares taking the overall subscription to 2.08 times (42.93 crore shares) of the 20.65 crore shares on offer.
The Government raised over Rs 1,700 crore through 5 per cent stake sale in SAIL and the over-subscription level among retail investors was higher at 2.66 times than that of the institutional investors at 2.01.