Stock market regulator Sebi’s directive to public sector companies to reduce the promoter’s (the government’) shareholding to 75 per cent from the present 90 per cent will be a bonanza for the primary market. The primary market has been languishing and lacks the effervescence of the secondary market.
Public issues had dried up in the last two years and as the Sebi chairman had earlier said, promoters had cancelled some 60 public issues last year citing a sluggish market even though they had got all the permissions.
Sebi feels capital market rules should apply uniformly to both the private and public sectors and had discussed this with the government. Since the listed companies in the private sector must have 25 per cent public shareholding, the government will have to amend the Securities Contracts (Regulation) Rules to mandate state-owned companies to have a 25 per cent public shareholding in the next three years. This would also help the government shore up its finances.
According to available figures, there are 34 public sector units, one being Coal India, where the government’s shareholding is 75 per cent. If the government is to meet this requirement, it will have to offload stake worth Rs 61,282 crore in the next three years. There is considerable excitement among market players as this would give a much-needed boost to the primary market and, if there are a few good successful public offers from PSUs, it would persuade private companies to also come to the markets. This, in turn, would also boost the investment climate, which is just not picking up.
