Govt seeks merchant bankers for stake sale in PSU banks, financial institutions

The Department of Investment and Public Asset Management (DIPAM) has invited bids from merchant bankers to assist in the government’s proposed stake sale in public sector banks (PSBs) and listed public financial institutions (PFIs).

According to the request for proposal (RFP) floated on Monday, the selected bankers will be empanelled for three years, with the possibility of a one-year extension. They will advise the government on the timing and modalities of the equity dilution.

“The Government of India (GOI) intends to empanel BRLMs/MBSBs for a period of three years (further extendable by one year) in the context of dilution of GOI equity in select Public Sector Banks (PSBs), and select listed Public Financial Institutions (PFIs) (as defined under the Companies Act, 2013) using SEBI-approved methods in accordance with the extant SEBI/RBI/IRDAI and Stock Exchange regulations/guidelines,” DIPAM stated.

The government’s offer-for-sale (OFS) plan aims to include select public sector banks and listed financial institutions, particularly those that have not yet met the 25% minimum public shareholding requirement.

Merchant bankers can apply under two categories based on their capacity to handle capital market transactions. The ‘A+’ category is for transactions worth ₹2,500 crore or more, while the ‘A’ category applies to deals below ₹2,500 crore. Among the empanelled bankers, DIPAM may select one or more for a specific transaction as per requirement.

Also read: PSU Bank Stake Sale: Government approves ₹10,000 crore QIP plan for five lenders — Exclusive

The responsibilities of the selected bankers include conducting market surveys, organising domestic and international roadshows to attract potential investors, and arranging meetings with top management, institutional investors, and high-net-worth individuals (HNIs).

They will also be tasked with communicating the entity’s growth potential and developing key marketing themes. However, all expenses related to these activities, except for the travel and stay of government and PSU officials, will be borne by the bankers.

Likely candidates for the government’s OFS include IOB, Central Bank of India, Punjab & Sind Bank, UCO Bank, New India Assurance, and LIC.

Also read: Finance Ministry to meet heads of public sector banks on Mar 4, to review financial performance

Finance Minister Nirmala Sitharaman had announced in her 2021-22 Budget speech that the government intends to privatise two public sector banks, in addition to IDBI Bank.

(With PTI Inputs)