Big-ticket divestment in the offing

Market players say the government is likely to attempt, at least, one big-ticket sale this month.

The success of the Container Corporation of India (Concor) and NTPC offer for sale within a couple of weeks of each other seems to have buoyed the government's chances of raising more funds through disinvestments.

The actual numbers at Rs 19,500 crore (Rs 195 billion) are less than half the targeted amount.

Market players say the government is likely to attempt, at least, one big-ticket sale this month.

The likely candidates could be Coal India or Oil and Natural Gas Corporation.

It seems the government has already sounded out banks and insurers, particularly Life Insurance Corporation, to keep the powder dry.

Some analysts believe pure-play power financing companies could soon face an existential crisis.

The credit demand from the power sector is lacklustre and 40-70 per cent of these lenders' private sector loans have been classified as bad loans.

The conversion of state electricity board loans to bonds under the UDAY scheme will hit their profits as well as their loan growth potential in the coming years.

Analysts say this issue will be a big challenge for Power Finance Corporation and Rural Electrification Corporation, as the government may only use them sporadically to serve its larger interests.

A troubled foreign fund house, which has been up for sale in the last couple of months, is finding few takers.

According to industry sources, the only offer is from a domestic fund house which has offered a flat fee and an amount that is even less than one per cent of the fund's assets. 

While a couple of other small players would be willing to put up a marginally higher amount, the seller has been unable to negotiate a decent price.

However, since the trustees of the fund house are very keen to exit, there could soon be a deal.