Merchant Bankers, Law Firms To Be Empanelled For Disinvestment: FinMin
The Finance Ministry has invited bids for the empanelment of legal advisors and merchant bankers to assist the government in central public sector enterprises (CPSEs) disinvestment transactions, undertaken through stock market dribbling and offer for sale(OFS).
The bids have been invited in four categories -- B, A, A+, and A++ based on the transaction size.
To qualify for empanelment in the A++ category, which requires an OFS transaction size of more than Rs 2,000 crore, merchant bankers who are interested must have completed at least one equity market transaction of the same size.
To be considered for managing OFS transactions of sizes ranging from Rs 750 crore to Rs 2,000 crore (A+) and less than Rs 750 crore (A), the interested merchant banker must have previously managed at least one capital market transaction of Rs 750 crore and Rs 500 crore respectively between April 2020 and the present.
Under category B, merchant bankers with a minimum of five years of experience in share broking can participate in the sale of CPSE shares on stock exchanges (Dribbling). The bidders in this category should have a minimum net worth of at least Rs 25 crore, which includes the net worth of their parent entity.
The selling brokers and merchant bankers would be empanelled for a period of two years.
The Department of Investment and Public Asset Management (DIPAM) said that the Government of India (GOI) is envisaging disinvesting its shareholding in CPSEs through the OFS through the sale of Shares in the stock market (Dribbling) or Stock Exchange Mechanism from time to time for which this Request for Proposal (RFP) for Empanelment of merchant broker and stock brokers is being floated.
The last date for placing bids by legal advisors and merchant bankers is 28 December.
The scope of work of the merchant banker with respect to OFS transactions would include conducting road shows and market surveys, to generate interest amongst prospective investors.
The merchant bankers would be required to assist in securing approval and exemptions and advise on the regulatory norms, wherever necessary, from regulatory agencies such as RBI, SEBI and Stock Exchanges.
The RFP floated by DIPAM states that the banker would be advising the government in decision-making with respect to the timing of selling shares depending on market conditions, sometimes only certain stocks are dribbled and decisions on stocks would be required to be taken when stocks perform better.
