| NEW DELHI
NEW DELHI Aug 9 India has exempted state-owned
firms from new rules requiring companies to have a public float
of at least 25 percent, following two major share sales from
government-owned firms earlier in the year that drew tepid
The regulations, set out by the government in June, requires
listed companies with a free float of less than 25 percent to
increase it by a minimum of 5 percent a year.
They were expected to force 10s of billions of dollars in
share sales and prompt new issues.
However, the government said on Monday state-run listed
firms would be exempt from floating a minimum of 25 percent on
stock exchanges without saying the reason for its decision.
Analysts had said the rules put pressure on the government
in its programme to cut its holdings in 60 state firms over the
next few years. It plans to raise $8.6 billion through stake
sales in the fiscal year to March 2011.
Already shares sales from state-run NTPC (NTPC.BO), India's
No.1 power producer, in February, and NMDC (NMDC.BO), the
country's top iron-ore miner, in March failed to receive
significant interest from foreign investors. They were covered
only after state-run financial groups pitched in with big
The government still owns 84.5 percent of NTPC, and 90
percent of NMDC, stock exchange data showed.
In 2009, the government said unlisted state firms making a
profit in the past three consecutive years should list and all
profitable, listed state firms must have at least 10 percent of
their shares in public hands.
State-run Coal India, the world's largest coal miner, will
file a draft prospectus this week for an initial public offering
to raise as much as $3 billion, three sources with direct
knowledge of the matter told Reuters on Friday. [ID:nSGE6750CI]
Other government share sales in the pipeline this fiscal
year include public offerings in Steel Authority of India Ltd
(SAIL.BO), Hindustan Copper (HCPR.BO) and Power Grid (PGRD.BO).
The regulation on public floats could force companies in
India to raise a total of as much as $60 billion in stake sales
over the next few years, according to an estimate by Prithvi
Haldea, chairman and managing director of Prime Database, said
in June when the new rules were set out.
Indian companies raised about $20 billion in equity last
year in a market that rose about 80 percent. The benchmark index
.BSESN is up 4.7 percent this year.
Among companies in the 30-share benchmark BSE index, realty
firm DLF (DLF.BO) and software services firm Wipro (WIPR.BO)
have a public float of less than 25 percent, according to Bombay
Stock Exchange data.
Earlier this year, investment bankers forecast that India
could see equity issuance of roughly $30 billion in 2010, but
poor markets have led some companies to defer their plans.
(Editing by Surojit Gupta and Karen Foster)