Central public-sector enterprises
(CPSEs) may be allowed to merge and acquire other CPSEs as well as buy back
shares. The money thus raised may help the government bridge the huge
disinvestment gap in FY19. So far only 12.5% of the Rs 80,000 crore
disinvestment target has been achieved. Apart from M&A, the Finance
Ministry has shortlisted about a dozen CPSEs including Coal India, NTPC, Nalco,
BHEL, Hindustan Aeronautics, and NMDC, for a possible buyback of shares in the
current fiscal. The boards of three CPSEs - NALCO, NLC and Cochin Shipyard -
have already approved share buybacks collectively worth Rs 2,000 crore. It is said the government may
kick-start the M&A process with top power generation company NTPC taking
over hydropower firm SJVN, in which the government holds a 63.79% stake. NTPC
is said to be all prepared for this acquisition. The merger of REC and Power
Finance Corporation (PFC) is also on cards. The government owns 65.64% in PFC
and 57.99% in REC. A fortnight ago, the government was reportedly looking to
sell its stake in PFC to REC, which could fetch about Rs 14,000 crore to the
exchequer. The Department of Investment and
Public Asset Management (DIPAM) has already floated an expression of interest
for engaging advisors for M&As in the power sector. DIPAM said it looks to
engage one adviser in the process of (up to) two M&A in the energy sector. Collectively, the government
reportedly expects to raise around Rs 21,000 crore at existing market prices if
both the deals work out in this financial year. In addition, the source said
that some blue-chip CPSEs have shown interest in acquiring smaller CPSEs where
they feel synergies exist. NHPC Ltd, North Eastern Electric
Power Corporation Ltd, and Power Grid Corporation of India Ltd are other firms
where synergies are reportedly being explored. However, before moving ahead the
government may do well to streamline the nuts and bolts of the merger process.
For instance, although ONGC bought the government's entire 51.11% stake in HPCL
for Rs 36,915 crore last year, the latter is yet to recognize the oil and gas
exploration company as its promoter. In fact, it has only one member from ONGC
on its board.
More CPSEs' merger on cards to meet divestment target
By IndianMandarins - 2018-11-02 11:00:09
Central public-sector enterprises
(CPSEs) may be allowed to merge and acquire other CPSEs as well as buy back
shares. The money thus raised may help the government bridge the huge
disinvestment gap in FY19. So far only 12.5% of the Rs 80,000 crore
disinvestment target has been achieved.
Apart from M&A, the Finance Ministry has shortlisted about a dozen CPSEs including Coal India, NTPC, Nalco, BHEL, Hindustan Aeronautics, and NMDC, for a possible buyback of shares in the current fiscal. The boards of three CPSEs - NALCO, NLC and Cochin Shipyard - have already approved share buybacks collectively worth Rs 2,000 crore.
It is said the government may kick-start the M&A process with top power generation company NTPC taking over hydropower firm SJVN, in which the government holds a 63.79% stake. NTPC is said to be all prepared for this acquisition.
The merger of REC and Power Finance Corporation (PFC) is also on cards. The government owns 65.64% in PFC and 57.99% in REC. A fortnight ago, the government was reportedly looking to sell its stake in PFC to REC, which could fetch about Rs 14,000 crore to the exchequer.
The Department of Investment and Public Asset Management (DIPAM) has already floated an expression of interest for engaging advisors for M&As in the power sector. DIPAM said it looks to engage one adviser in the process of (up to) two M&A in the energy sector.
Collectively, the government reportedly expects to raise around Rs 21,000 crore at existing market prices if both the deals work out in this financial year. In addition, the source said that some blue-chip CPSEs have shown interest in acquiring smaller CPSEs where they feel synergies exist.
NHPC Ltd, North Eastern Electric Power Corporation Ltd, and Power Grid Corporation of India Ltd are other firms where synergies are reportedly being explored.
However, before moving ahead the government may do well to streamline the nuts and bolts of the merger process. For instance, although ONGC bought the government's entire 51.11% stake in HPCL for Rs 36,915 crore last year, the latter is yet to recognize the oil and gas exploration company as its promoter. In fact, it has only one member from ONGC on its board.
