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With the fiscal deficit breaching 90 per cent of the Budget target in nine months, the Government is all set to move ahead with divestment in ONGC and BHEL within this fiscal.
An Empowered Group of Ministers (EGoM) is scheduled to meet on Thursday to take a call on the modus operandi and timing of offloading equity in both companies.
A person familiar with the development told Business Line , “The EGoM is likely to consider various options, including offer for sale of shares through stock exchanges, before giving the final timeline.” Divestment of ONGC and BHEL could yield Rs 15,000-17,000 crore.
The Securities and Exchange Board of India, in its board meeting on January 3, approved the offer for sale of shares through stock exchanges.
It said, “Apart from use for compliance with minimum shareholding requirements, this method can be used by promoters of top 100 companies (based on average market capitalisation) for sale of their stake.” The SEBI has notified the mechanism.
In such a system, the Life Insurance Corporation, various public sector banks or fully-owned Government entities or special purpose vehicles may be allowed to bid for shares. Every bid/buy order would be required to be backed by 100 per cent upfront cash margin.
The settlement shall be through the exchange clearing mechanism. Allotment would be done either on price priority or clearing price basis proportionately and would be overseen by the exchanges.
The offer shall be for at least one per cent of the company's paid-up capital, subject to a minimum of Rs 25 crore. Stock exchanges would offer a separate window for such sales, whose duration would co-exist with normal trading hours.
Although the option of follow on public offer (FPO) is always available, it may not be the right option, as the market is still not stable and the secondary market is down, the source added. The Government is also considering buy-back and cross-holding to meet the divestment target.
The Government wants to offer 5 per cent each in ONGC and BHEL. After the divestment, its holding will come down to 69.14 per cent in ONGC and 62.72 per cent in BHEL.
The Government has set a disinvestment target of Rs 40,000 crore this year, but only over Rs 1,100 crore have been raised so far.
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