IPOs, buybacks to fuel government’s divestment plan: Dipam Secretary

“We have made use of the market opportunities through three very successful transactions in the defence sector... There are IPOs planned,” said Tuhin Kanta Pandey, secretary in the Department of Investments and Public Asset Management.

Agencies
The government has so far raised ₹5,695 crore from offers for sale and ₹10,992 crore from the Bharat Bond Exchange Traded Fund. Its divestment target for FY21 is ₹2.1 lakh crore.
New Delhi: The government will push forth with initial public offers and share buybacks in key public sector enterprises in the remaining months of this financial year, a top official said, following the successful public listing of Mazagon Dock Shipbuilders Ltd. and other offers for sale.

“We have made use of the market opportunities through three very successful transactions in the defence sector... There are IPOs planned,” said Tuhin Kanta Pandey, secretary in the Department of Investments and Public Asset Management.

Public offers will be one of the “very big priorities” as they will generate future value for the government, Pandey said. He added that buybacks will be another high priority area.


“Wherever our CPSEs have extra cash after meeting the capex needs, we’re requesting them to come with buyback if the stock price is lower than the book value, or even if the stock price is high – in this case, they can reward shareholders,” Pandey said.

The department expects share buybacks from seven-eight companies in this financial year, but will allow their boards to take the final call. NTPC, Coal India, NMDC and Engineers India are likely to offer buybacks, people aware of the matter said.

IPOs, Buybacks to Fuel Govt’s Divestment Plan: Dipam Secy

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The government’s strategy is to look at each company separately and keep in mind the interests of long-term investors, Pandey said.

Mazagon Dock Shipbuilders was the first public sector enterprise to be listed in 2020, with the government having sold a 15.17% stake through an offer for sale. The government plans to sell 27% in RailTel Corporation and is expected to sell 20-25% in Indian Railways Finance Corporation.
Documents for the IRFC share sale will be filed soon, with both the government and the company seeking to raise money through a combined issue. A public issue of Wapcos, a consultancy under the Jal Shakti ministry, is also expected.

The government has so far raised ₹5,695 crore from offers for sale and ₹10,992 crore from the Bharat Bond Exchange Traded Fund. Its divestment target for FY21 is ₹2.1 lakh crore.

Pandey said ETFs have had their run and would not be used further. He clarified that the Employees’ Provident Fund Organisation’s holding in CPSE ETF will not be sold as well.
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“There’s no plan by EPFO to sell CPSE ETF holding,” he said.

EPFO has been investing in the stock market through ETF since 2015. It invests 15% of its annual incremental receipts in equity and the rest in debt.
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