The divestment ministry is preparing a bonanza for the capital market in early March next year. The initial public offer of Dredging Corporation of India will be followed in quick succession by the book-built market offer of government's residual stake in IBP, IPCL and CMC.
"As a conservative estimate, we expect to rake in Rs 1,200 crore from these offers. We have been told that there is sufficient money in the market and there is no question of a crowding-out," a senior ministry official told Business Standard.
The recent setback to the government's divestment programme seems to have made the ministry cautious. The market value of the government holding in IBP, IPCL and CMC, based on Wednesday's closing price on the Bombay Stock Exchange, is Rs 2,388.49 crore (Rs 23.88 billion).
When asked to comment on the very low estimate, the official said: "We would rather rake in Rs 3,000 crore (Rs 30 billion) on an expectation of Rs 1,200 crore (Rs 12 billion) rather than the other way round."
The proposal of a public offer of 20 per cent of government equity in DCI and the residual stake in five erstwhile public sector enterprises -- IBP, IPCL, CMC, VSNL and Balco -- was approved by the Cabinet Committee on Divestment in July this year.
Kotak Mahindra and Enam Consultants are working on the IPO of DCI, a mini-ratna public sector enterprise. The offer is expected to fetch the government Rs 250 crore (Rs 2.50 billion).
The government holds 98.56 per cent stake in DCI. The premier dredging organisation, with a market share of 87 per cent, posted net profits of Rs 161.83 crore (Rs 1.62 billion) on a record turnover of Rs 519.52 crore (Rs 5.19 billion) in 2002-03.
ICICI Securities and Kotak Mahindra are the lead managers for IBP's market offer. The government holds 26 per cent residual stake in the company.
The government is in the process of appointing merchant bankers for assisting it to offload the residual stake of 33.95 per cent in IPCL. The divestment ministry on Tuesday invited bids from bankers for the book-building offer of 26.25 per cent stake in CMC.