Tata Communications Limited share price stalled by 8% on January 20, 2020, as the Government of India, declared that it will be disposing of its remaining 26.12% stake worth more than Rs 8000 crores in the company.
This news came in just a few days after the company had reported a healthy increase in Q3 FY20 profits. The Department of Investment and Public Asset Management (DIPAM), which relates itself to the management of Central Government Investments in equity and disinvestment of equity in Central Public Sector Undertakings, has set February 3 as the deadline for bid submissions as the bids will commence on the next day, February 4.
These bids will be summoned from merchant banker/selling brokers and the undertaking will be complete by 20th March, Livemint reported.
An anonymous source from the Finance Ministry said, “A part of the stake will be sold through ‘offer for sale’ (OFS) and on the discovered price while the remaining stake will be sold back to the Tatas. Though how much exactly will be sold through OFS has not been declared yet, the Cabinet Committee on Economic Affairs (CCEA) has approved selling up to 16 per cent stake through OFS.”
Tata Communication Limited (TCL), earlier called VSNL, was a Central Public Sector Enterprise which was then privatized in 2002 when the Government divested 25% stake in it, with management rights being granted to the Strategic Partner (SP), Panatone Finvest Limited.
The negotiation that will be taking place will be designed in a way that an open offer is not generated in the same way it had happened in 2002 when the Tatas had given an open offer.
It is evident that this decision of the Government comes as a supplementary to its strategic disinvestment goals. The Government has already been in works with similar disinvestment plans for a while; it has collected approximately Rs. 15,220 crores by making minority stake sales and with the Initial Public Offering (IPO) of Mazagon Dock Shipbuilders Limited.
