Saturday, June 4, 2016

Another Round of PSU Stake Sale, Please Don't Force LIC to Come for Rescue

Government is again lining up companies for sale. This time - HUDCO, Hindustan Aeronautics Limited, RINL and Cochin Shipyard Ltd. Government of India (GoI) also set an ambitious target of 8000 crores for stake sale.

So far good; after all, there no need for GoI to hold 100% stake in above mentioned companies. Making them a corporate entity will improve efficiency, transparency and will make some money for GoI.

But the problem which may arise during the whole process is, what will happen if not much institutions/people are subscribing the IPO? I hope that environment is good and IPOs will be oversubscribed. What if it’s not?

Will government ask LIC to come as White Knight and save IPOs; just like what happened in previous occasions? I hate to see such a scenario. There is no problem in LIC buying up shares, but it should not be like, only LIC is buying the shares. At least this time, let LIC do their math and decide on to what extent they are willing to buy up shares in IPO.


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