FII support salvaged PSU stake sale: govt
29 July 2013
Financial institutions, mainly foreign institutional investors (FIIs), insurance companies and banks, contributed to 74 per cent of the government's stake sale in public sector undertakings in the 2012-13 financial year, the government clarified today.
The government also refuted reports in the media, which stated that the Life Insurance Corporation (LIC) of India and public sector banks (PSBs) helped the government salvage the OFS (offer for sale) transactions on the stock markets.
During the year 2012-13, the Department of Disinvestment completed seven OFS transactions, including the sale of equity in Oil India Ltd, NMDC Ltd, NTPC Ltd, and SAIL.
The government raised about Rs23,830 crore from these seven offerings.
Of this, a major part of 39 per cent came from FIIs while insurance companies, including LIC, accounted for about 25 per cent and banks, including public sector banks, bought 10 per cent of the offerings, the government said in a release.
In fact, the government said, FIIs absorbed 42 per cent of the stocks on offer in the major offers that included Oil India Ltd, NMDC Ltd, NTPC Ltd and SAIL, which raised a total of Rs22,087 crore.
LIC bought 22 per cent of the shares on offer while banks and other financial institutions bought less than 9 per cent of the stakes on offer, the government pointed out.
Government said the low pricing of the offerings played an important role in meeting sale targets by attracting investors and ensuring participation of all categories of investors in a slack market.
Given the inherent strength of the government companies, participation by long-term investors like FIIs or domestic institutions like LIC are good, it added.