Mumbai, July 22 (Inditop.com) Listed companies could raise over Rs.159,000 crore if Finance Minister Pranab Mukherjee’s proposal to reduce promoter stake in all listed companies to 75 percent becomes a policy, a report released Wednesday said.
Of this, state-owned firms alone will contribute as much as Rs.138,000 crore, the report by broking firm SMC Capitals said.
Among the listed companies, there are about 180 firms where promoters hold more than 75 percent of the equity. Of these, 28 are public sector units (PSUs), while the remaining 152 are private companies, said the SMC report.
Mukherjee had said in his budget proposal July 6 that the government would look at increasing public stake in all listed companies to 25 percent, which currently is about 15 percent.
“To comply with the proposal of reducing the promoters’ stake to 75 percent, the total value of stake that needs be offloaded is a whopping Rs.159,263 crore,” said SMC Capitals equity head Jagannadham Thunuguntla.
“Of this amount, stake sale in PSU companies will aggregate to about Rs.138,075 crore, and that of non-PSUs will be Rs.21,188 crore,” he added.
The chairman of the markets watchdog, Securities and Exchange Board of India (SEBI), has however proposed to the government that the increase in public holding be done in a phased manner and companies given time to dilute promoter holding to 75 percent.
“Eventually, the markets will find more FPOs (follow-on public offerings) or QIPs (qualified institutional placements) from some high profile PSUs in some time,” Thunuguntla said.
However, there are concerns about the capacity of investors to absorb such huge amounts of stake offload.
Given that the government itself is planning mega initial public offers for companies like Oil India and National Hydro Power Corp, there are doubts whether there will be enough investors to buy additional stake in other listed entities.
“Keeping this account, it will be more practical and sensible to implement this regulation in a phased manner by the finance ministry, facilitating smoother implementation,” said the report.
