The validity periods of the DRHPs filed with SEBI of both NHPC and Oil India expire in September this year, said Mr Jagannadham Thunuguntla, Equity Head at SMC Capitals. He added that the Government will look at selling its stake in only a few companies, which will also garner most funds rather than sell small stakes in several PSUs. “The Government may not be as aggressive as the market would wish it to be,” he said.

1. Merchant bankers expect only two PSU public issues
Published on Thu, Jul 16, 2009 at 09:12 , Updated at Thu, Jul 16, 2009 at 09:14
Source : The Hindu Business Line.
Merchant bankers believe that not more than two public sector IPOs are likely to happen this
year, notwithstanding the Finance Minister’s statement indicating that disinvestment is still top
on the Government’s agenda.
National Hydroelectric Power Corporation (NHPC) and Oil India are the two PSU companies
which merchant bankers think will hit the markets with their IPOs. “NHPC and Oil India are the
most likely companies to come out with IPOs this year and you might see minority stake sales in
PSU banks as well. The Government will divest slowly and there will not be many big bangs
IPOs,” said Mr Saurabh Mukherjea, Head of Indian Equities at Noble Group.
NHPC and Oil India will raise close to Rs 3,000 crore through their issues.
The Finance Minister even issued a list of companies proposed for disinvestment. In 2009-10,
the Government proposes to disinvest a small portion of equity in Rail India Technical and
Economic Services Ltd, Cochin Shipyard, Telecommunications Consultants India Ltd,
Manganese Core India Ltd, Rashtriya Ispat Nigam Ltd and Satluj Jal Vidyut Nigam Ltd.
But investment bankers said they expected disinvestment to happen only in those companies
which are more profitable. “NHPC and Oil India — the Government companies which are not
impacted by the economic slowdown — are likely to see their IPOs hit the market. The
Government would look at divesting such profitable companies,” said Mr Rajnish Rangari,
Country Head, Investment Banking-CMG at Karvy Investor Services.
The validity periods of the DRHPs filed with SEBI of both NHPC and Oil India expire in
September this year, said Mr Jagannadham Thunuguntla, Equity Head at SMC
Capitals. He added that the Government will look at selling its stake in only a few companies,
which will also garner most funds rather than sell small stakes in several PSUs.
“The Government may not be as aggressive as the market would wish it to be,” he said.
Investment bankers said that the signs are pointing towards a revival of the IPO market and that
even two PSU divestments would pave the way for this. “PSUs hold the key to the revival of the
primary market and the outcome of these IPOs is very critical,” said Mr Thunuguntla.
“Once the Adani Power (private sector) and NHPC IPOs go through we will get a clearer picture
of things to come,” said Mr Mukherjea. Mr Rangari said most PSUs were under-valued and that
their IPOs usually enjoy good response from the investors. He said that his company has gota
few mandates and has one issue a month lined up for the next four months. “They are small
issues whose total size is between Rs 100 crore and Rs 150 crore each,” reports The Hindu
Business Line.