Various wings of the government seem to be on a collision course with the finance ministry on the minimum public float norm for listing,
with the latest being Coal India that’s reluctant to sell more than 10% in an initial offer. Coal minister Sriprakash Jaiswal on Wednesday ruled out the possibility of selling more than 10% in the state-owned coal miner even after listing on the bourses.
“The disinvestment in CIL will not exceed 10% even if the government decides on 25% disinvestment in PSUs,” said Mr Jaiswal. “Any such decision will not be applicable to CIL. The 10% disinvestment was just a pre-condition to CIL getting navratna status.”
The Cabinet Committee on Economic Affairs had last week approved 10% disinvestment of government stake in Coal India. The finance ministry this month amended the Securities Contracts Regulation Act to mandate minimum 25% public holding for listed firms in a phased manner.
Nearly 175 companies, including 35 PSUs such as NMDC and Hindustan Copper, will have to offer shares to public to meet the new norms. Some are unhappy with this forced dilution. The amendment also provides for firms with a market cap over Rs 4,000 crore to sell 10% in an IPO and hike it to 25% gradually.
The disinvestment department has also sought a review of the guidelines as PSUs have expressed fears that the rule could discourage these companies from going public and also lead to forced disinvestment and impact valuations. Experts, too, have called for a review. “You can’t have one-size-fits-all,” said Prime Database MD Prithvi Haldea.
“The government will have to review the post listing norms for companies depending on their market cap. Large companies should be exempt.” “The guidelines are aimed at ensuring public participation, but there is no guarantee that retail investors will be interested,” said SMC Capitals equity head Jagannathan Thunuguntla. “So the norms will just put pressure on firms.”
Source: Economic Times
Posted by: Rishma Shetty
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