Despite volatile market conditions Bharat Heavy Electricals limited (BHEL) files papers with market regulator Securities Exchange Board of India for its follow on public offer (FPO) that will offload 5 percent stake of the government in the market. The 5 percent FPO is expected to fetch rupees 4000 Crore to the power equipment maker.
In July Government had appointed 4 merchant bankers – DSP Merrill Lynch, Morgan Stanley, Kotak Mahindra Capital and ICICI Securities for BHEL’s FPO. Looking at the present market value of rupees 80,141.77 Cr the sale of 5 percent shares will be worth over 4000 Cr. The proposed BHEL FPO is a government’s disinvestment plan to collect around Rs 40000 crore in the financial year 2011-12. With a very high volatility in the markets there are concerns whether the target will be met in time or not.
This year the government has been able to collect only Rs 1162 Cr through its stake sale in PFC (Power Finance Corp). On August 30 government approved disinvestment of 5 percent shares of BHEL. At present the government holds 67.72 percent stake.A discount of 5 percent will be given to retail investors to encourage public ownership in Public Sector Enterprises. In the offer 10 percent of the shares will be reserved for its employees and they would also be given a discount of 5 percent. The government has also approved its disinvestment plans in SAIL, HCL, ONGC and NBCC.
“Bell the bull says: Last year Government raised Rupees 22763 crore through disinvest in PSU.”