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The government raised about Rs 23,830 crore offloading stake in 7 state-run firms during 2012-13. 39 percent of this amount came from FIIs, union government said in a press release. Only about 25 percent came from Insurance Companies including LIC and less than 10 percent from banks including Public Sector Banks.
The government said this in response to media reports that disinvestment of state-run firms are salvaged by Life Insurance Corporation (LIC) of India and Public Sector Banks (PSBs).
During the year 2012-13, the Department of Disinvestment completed 7 OFS transactions – the major ones being Oil India, NMDC, NTPC, and SAIL.
In the 4 big Issues, viz., Oil India Ltd., NMDC Ltd., NTPC Ltd., and SAIL an amount of Rs 22,087 crore was raised, out of which the contribution of FIIs was 42 percent, Insurance Companies including LIC was 22 percent, and Banks including Public Sector Banks was less than 9 percent.
Government while deciding the pricing of a particular offering take into consideration factors like the strength of the Company, market conditions, investor interest, and participation of all categories of investors, etc.; and fix a very reasonable level of price. Given the inherent strength of the Government Companies, long-term investors’ participation is good in Government Issues - whether FIIs or Domestic Institutions like LIC.