In news The government is planning to sell its residual stakes in public sector firms like Paradeep Phosphates, Hindustan Zinc and Balco, which were privatised during the Atal Behari Vajpayee regime.
The firms are staying highly profitable after the transfer of management control to a private player. Thus, selling these stakes could yield a significant revenue for the government.
The government intends to complete the privatisation of Air India, BPCL, Shipping Corporation of India, BEML, Pawan Hans and Nilanchal Ispat Nigam Limited. More airports would also be offered as public-private partnership ventures.
These are the transactions where there is sufficient interest from bidders and are the second stage of the due diligence and financial bidding is near completion.
GAIL is also likely to come up with an offering soon through the Infrastructure Investment Trust (InvIT) structure.
What are Infrastructure Investment Trusts?
InvITs are instruments that work like mutual funds.
They are designed to pool small sums of money from a number of investors to invest in assets that give cash flow over a period of time. Part of this cash flow would be distributed as dividend back to investors.
The minimum investment amount in an InvIT Initial Public Offering (IPO) is Rs 10 lakh, therefore, InvITs are suitable for high networth individuals, institutional and non-institutional investors.
InvITs are listed on exchanges just like stocks — through IPOs.
However, the Indian InvIT market is not yet mature and has supported the formation of 10 InvITs till date of which only two are listed.
The InvITs listed on the stock exchange are IRB InvIT Fund and India Grid Trust.
