You could call it the eleventh-hour-fifty-ninth-minute phenomenon. Come January explanatory headlines sprout out of the woodwork of government about the imminent disinvestment of an entity, promising the meeting of the elusive disinvestment target.
The script of the annual spectacle is reminiscent of the 1999 Hollywood blockbuster Runaway Bride where the bride ditches the groom at the altar and escapes via windows and chutes. Disinvestment, in the dramatic sense, is the runaway bride of India’s most tracked, tagged and watched annual event.
In 2022-23 the government vowed to realise around Rs 65,000 crore through disinvestments. The promise of target fulfilment is embedded in the disinvestment of IDBI Bank. The landscape is buzzing with the induction of exceptions to rules and regulations. The latest sweetener added is the compression of the government’s voting rights to 15 per cent and the reclassification of the government’s stake by SEBI as a public holding.
It begs the question as to why the inductions of exceptions must await the eleventh hour. Consider the global environment. On the face of it, IDBI Bank is valued at USD 7.5 billion. Effectively the bidder would have to fork out over USD 4 billion – not a small sum even for the Bloomberg Billionaires. In late 2021 global interest rates were hovering around zero or one per cent. Would it have not made more sense for a foreign bidder to consider a bid when the US Federal Funds Rate
The government, more than others, would have known from data the extent of clean-up undertaken accompanied by rising demand for credit. Over the past 18 months, the big buzz in the stock market was the upside promised by banks. Funds, analysts and every punter worth their rupee has been betting on public sector banks – forget the big guns such as SBI and Bank of Baroda, even smaller players have soared. In the past two years shares of public sector stocks have roared – the NSE Nifty PSU Bank Index