Is Sebi proposing a route for PSU disinvestment?

Securities and Exchange Board of India (Sebi) Chairman U.K. Sinha on Wednesday said that he was in talks with the government to keep the minimum public shareholding of state-run listed companies at 25 per cent.

At present only private sector companies are compulsorily required to have at least 25 per cent public shareholding, while for government-owned companies the minimum threshold level is only 10 per cent.

There are 34 listed state-run companies where the government holds more than 75 per cent stake. If the government brings its holding down to 75 per cent in these companies , it (as on June 3, 2014) could garner Rs 61,355 crore.

Divesting Coal India further would alone help in garnering Rs 36,375 crore, accounting for 59 per cent of the total Rs 61,355 crore. As on March 31, 2014, government held 89.65 per cent stake in the company.

NMDC, NHPC, Neyveli Lignite, SAIL, MRPL, SJVN and Central Bank of India are other state-run companies where the government can raise over Rs 1,500 crore each if it brings down its holding to 75 per cent.  

If accepted, Sebi's proposal can be the easy way out for the government to raise money by divesting its stake in state-run companies. Earlier this year the government launched its state-run ETF where is raised over Rs 3,000 crore by divesting stakes in 10 PSU companies which included the likes of ONGC, Coal India, OIL India and Gail.