HZL Sale :Govt hopes to meet Rs 65,000 cr FY23 disinvestment goal via offer for sale

The central government is aiming to meet its disinvestment target of Rs 65,000 crore in FY23 by completing its first tranche of proceeds from the sale of Hindustan Zinc Ltd (HZL).

“We are working on the Hindustan Zinc offer for sale (OFS) and expect some stake dilution to happen in the current fiscal,” a senior government official said. He added that other stake sales in the pipeline, including IDBI Bank and Concor, would take time and may not be completed this year, and that the Hindustan Zinc OFS is likely to come from a minority stake sale.

At the current market cap, the government’s stake in HZL is worth nearly Rs 35,000 crore. However, since the stake sale will happen in tranches, the Centre may get some portion of the expected receipts in the current financial year itself.

The Department of Investment and Public Asset Management (DIPAM) has so far raised Rs 62,433 crore from stake sales and dividends. This includes disinvestment receipts of Rs 28,382 crore.

“We are very mindful of value-based disinvestments, rather than chasing targets. We have already raised Rs 62,000 crore this year, including dividends of Rs 34,000 crore,” Disinvestment Secretary Tuhin Kanta Pandey said at a global policy event organised by CII.

Speaking about central public sector enterprises (CPSE), Pandey said that the government wants them to improve their market cap and return on assets (RoA), among other criteria. He stressed on the need to hive off non-core assets that are not linked to the operating companies’ main lines of business.

Talking about the disinvestment pipeline going forward, the disinvestment secretary said that IDBI Bank, Shipping Corporation of India, and BEML are some of the ongoing transactions that need to be completed.

Meanwhile, the government is hopeful of floating some offers for sale in order to achieve its current disinvestment target.

According to the official quoted above, an expression of interest (EOI) for Container Corporation of India (Concor) could be invited by January 2023, while the ongoing transaction of Shipping Corporation and BEML would likely close next financial year FY24.