Sebi's new listing norms to help govt raise Rs60,000 cr in share sales

The amendments to the listing norms announced by the Securities and Exchange Board of India (Sebi), which requires even state firms to have 25 per cent minimum public holding to remain listed, is expected to result in the government netting around Rs60,000 crore (around $10 billion) through share sales.

Listed state-controlled companies are at present required to have at least 10 per cent public shareholding against the 25 per cent minimum public shareholding prescribed for private sector companies.

The new norms would bring uniformity in listing norms across state-run and private companies (See: SEBI makes 25% public offer mandatory in IPOs).

The government is planning to divest stake in seven major state-run companies, including Coal India, SAIL, MMTC, NMDC, NHPC and Nalco, and the finance ministry, which handles the divestment department, expects to work out a road map for dilution of stake in these companies over the next two to three years.

The government holds 80 per cent or more stakes in several major PSUs and up to 90 per cent stake in some companies, including Coal India  Ltd, the world's largest coalminer, and minerals trader MMTC Ltd.

Sebi chairman UK Sinha said in all 36 state-owned companies, including the 23 that are part of the BSE PSU index, would have to sell shares to meet the new shareholding norms.

Sale of excess stake in the 23 PSUs alone is expected to fetch nearly Rs60,000 crore for the government, based on the current prices of the scrips.

Besides these, the government will also proceed with the sale of its residual stake in companies such as Hindustan Zinc and Balco.

The Bombay Stock Exchange's PSU index, which comprises state-controlled companies, is up nearly 15 per cent, against the 5.4 per cent gain for the main stock index, after the Modi-led government came to power.

The BJP that came to power largely on the promise of boosting economic growth in Asia's third-largest economy, is expected to speed up divestment of government stake to bolster revenue generation.

Divestment in companies like the State Bank of India, Coal India Ltd, Indian Oil Corp etc is expected to generate a lot of interest, especially among foreign investors. The divestment would also help generate investor interest in India.