The Cabinet Committee on Economic Affairs (CCEA) has given its approval for the second planned Initial Public Offering (IPO) of equity in state-owned companies for this financial year. It has approved disinvestment of 10% paid up equity of Housing and Urban Development Corporation (Hudco).
The government has approved a price discount of up to five per cent on the issue price to retail (small) investors and Hudco employees. The actual discount to them will be approved by the Alternative Mechanism based on recommendations of a High-Level Committee of Officers. As per the government’s statement, the paid-up equity capital of Hudco, with a net worth of Rs 7,800 crore, was Rs 2,002 crore as on end-March 2015. The face value of each share is Rs 10 at present.
In order to meet its ambitious stake sale target for 2016-17, the government is planning IPOs of equity in four public sector units and hopes to garner around Rs 8,000 crore. The department of investment and public asset management has identified Hindustan Aeronautics and Rashtriya Ispat Nigam as the companies it wants to take public, apart from Hudco and Cochin Shipyard, preparation for which is well under way.
For the current financial year, the government has set a disinvestment target of Rs 56,500 crore. Of this, Rs 36,000 crore is likely to come from minority stake sale in PSUs, including IPOs and Rs 20,500 crore from strategic sale. The government, which is planning to sell the stake in 15 PSUs in this fiscal, has already kick-started the disinvestment programme for the current fiscal with 11.36 percent stake sale in NHPC, which fetched Rs 2,700 crore.
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