Foreign banks except Deutsche stay away from Rs 42,000 crore divestment plan
July 25, 2015: There is an enormous obstacle in the path to success for Modi Government's disinvestment plan for 2015-16. The hurdle is about the bankers who are unwilling to advise on state-run firms' shares sales. The response is majorly expected from the foreign banks who earlier used to jostle vigorously for these mandates.
No foreign bank except Deutsche Bank has participated for the bids. The government has decided to sell stakes in 10 companies to raise more than $7 billion. The ten companies are divided into two baskets of five companies each. Bankers for one basket will have to handle all the companies of that particular basket. But there will be a confusion that when each of these companies is sold.
Moreover by gathering five companies at a go, bankers would be forced to sell companies for which they are not interested. The first basket includes OIL, COCOR, NMDC, MMTC and ITDC. The second basket consists of NTPC, EIL, BEL, NALCO and Hindustan Copper.
Only two bids were received for the first basket, and that are from ICICI Securities and SBI Capital Markets. For the second basket, seven bids were received. The list of bidders includes Deutsche Bank, JM Financial, Kotak Mahindra Capital Company, Yes Bank, Edelweiss.
For the fiscal year 2014-15 the government has raised approximately Rs. 24,000 crore. Almost 92% of it came from January 2015 transaction. The transaction was done due to a sale of 10%stake in Coal India for Rs. 22,557.63 crore. 5% stake in SAIL was also sold which fetched Rs. 1719 crore.