India targets $2.3 bln asset sales by year-end - sources

Reuters

By Prashant Mehra

MUMBAI, Nov 11 (Reuters) - India has revived plans to sellstakes in two state-owned companies to raise about $2.3 billionto boost public finances, aiming to push through a sale bymid-December to take advantage of a share market rally.

Two sources with direct knowledge of the matter saidinvestor roadshows will be launched in the United States onTuesday for a 10 percent stake in state refiner Indian Oil Corp(IOC).

The government's Department of Disinvestment (DoD), whichoversees stake sales in state companies, has also completed mostof the overseas roadshows to sell a 5 percent stake in stateminer Coal India, which could fetch about $1.5billion, the sources told Reuters.

The department hopes to launch the stake sales in the twostate companies before Dec. 15, they said, after which overseasinvestors typically start to wind down for Christmas and NewYear holidays.

"We would like to launch both before mid-December, but notsure if we will be able to do that," one of the sources said.

The government's planned sale of stakes in Indian Oil andother state companies including Coal India is critical torelieving pressure on public finances that could put thecountry's investment-grade credit rating at risk.

India has targeted raising $6.4 billion from selling stakesin state companies in the fiscal year ending March 2014, but hasso far managed only $233 million, as ministries squabbled overthe timing of the issues and the rupee fell against the dollar.

IOC's share sale had been set for October, but plannedroadshows were cancelled after the oil ministry pulled out,citing the weak share price and uncertainty over a newfuel-subsidy formula.

The Coal India stake sale has been halved from 10 percent to5 percent after union opposition.

"IOC (Indian Oil Corp) roadshows are starting from the 12th(of November), even though it is a difficult issue to marketbecause of the sector problems," the source said, referring tolosses that state oil retailers incur because of selling diesel,kerosene and cooking gas at state-capped rates.

The sources declined to be named due to the sensitivity ofthe matter. DoD officials, as well as officials at Indian Oiland Coal India could not be reached for comment.

MARKET RALLY

Indian Oil, India's largest refiner and fuel retailer, onFriday reported an 82 percent fall in net profit on account offoreign exchange losses and lower compensation from thegovernment for losses on fuel sales..

India's oil ministry has forecast revenue losses of 803billion rupees ($12.8 billion) for state fuel retailers IOC,Bharat Petroleum and Hindustan Petroleum inthe second half of this fiscal year, up from 623 billion in thefirst half.

The divestment department is keen to push through the stakesales to take advantage of a share market rally that sentIndia's benchmark stock index to a record high thismonth on the back of strong foreign inflows. The index is up 6.4percent this year.

The Indian Oil investor roadshows will be held in New Yorkand Boston. The Indian cabinet cleared the sale in August.

At current market prices, the 10 percent stake sale inIndian Oil could fetch New Delhi around $800 million. Thegovernment owns nearly 79 percent in Indian Oil, and 90 percentin Coal India.

So far, officials have pitched the Coal India offering toinvestors in the United States and Britain, and will proceed toAustralia and South East Asia this week, a third source said.Roadshows for local investors will be held after that, he added.

View Comments