Govt lines up PSU stake sales to cushion budget hit from oil

India is fast-tracking efforts to sell stakes in some of its largest state-owned companies, including the nation’s biggest life insurer, as Prime Minister Narendra Modi’s administration looks to bolster public finances strained by high oil prices.

Life Insurance Corp. of India, Hindustan Zinc Ltd., and several state-controlled banks are among eight companies identified by officials for stake sales in the coming months, according to people familiar with the matter. A share-sale in LIC alone may raise as much as 100 billion rupees ($1.05 billion), while Hindustan Zinc could fetch another 50 billion rupees for the government, Bloomberg reported earlier.

Officials overseeing the stake-sale program have been holding weekly meetings with investment bankers to gauge investor demand, determine pricing and finalize timelines for future offerings, said the people asking not to be identified as the matter is private. They also said more bankers are being hired to prepare additional state-run companies for future sales.


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Authorities are also considering inviting fresh bids and lowering the reserve price for the sale of a majority stake in IDBI Bank Ltd., the people said, after an earlier attempt was stalled by weak buyer interest. The fresh bids will be limited to those who participated in the previous round of the sale, they said.

A spokesman for the Ministry of Finance did not respond to a request for comment.

A wave of equity offerings may test investor appetite after foreign funds pulled a net $29 billion from Indian stocks in the first half, contributing in part to a near 9% decline in the benchmark Nifty 50 index. The state-run issuers may also face competition for capital from the mega initial share sales planned by Jio Platforms Ltd. and the National Stock Exchange of India Ltd.

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Officials were encouraged to expand the lineup of equity offerings by the strong investor response to share sales by Coal India Ltd. and NHPC Ltd. in recent months, one of the people said. The government expects proceeds from minority stake sales in state firms to provide additional fiscal headroom even though crude oil prices have declined in recent weeks, according to the people.

The government raised almost $2 billion from share sales in the three months through June as part of its asset sale target of 800 billion rupees for the 2026-27 fiscal year. That amount surpassed the total proceeds from disinvestments in each of the past three years, according to data compiled by Bloomberg.