Financial Daily from THE HINDU group of publications
Wednesday, Jul 31, 2002
Financial Daily from THE HINDU group of publications Wednesday, Jul 31, 2002 |
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Asset Management Companies Markets - Asset Management Companies 100 pc Govt-owned AMC proposed
Shaji Vikraman
NEW DELHI, July 30 THE Government is considering setting up a fully owned Asset Management Company (AMC) to which the equity of all State-owned companies will be transferred. The proposal to set up the 100 per cent AMC, which will hold the Government equity in all the State-owned companies, is one of the options mooted to accelerate disinvestment. Last month, the Cabinet Committee on Disinvestment (CCD) endorsed the proposal based on a recommendation made by the Finance Minister. The transfer of the equity to the AMC is aimed primarily at overcoming resistance from the administrative Ministries, who stall proposals for disinvestment in PSUs under their Ministries. Once the equity is transferred to the proposed AMC, handling the sale of the Government's equity will then be easy as it will involve only the Ministry of Disinvestment and, perhaps, the Finance Ministry, officials reckon. According to a senior Finance Ministry official, the has also given a general direction that the company should be 100 per cent Government owned. "Transferring the shares including the residual shares owned by the Government in companies where disinvestment has taken place to a non-government entity will not be feasible," the official said. The existing proposal is at variance with the one mooted by the former Finance Secretary, Mr Vijay Kelkar. He had the suggested the setting up of a Special Purpose Vehicle (SPV) to reduce the Government stake in select PSUs to 49 per cent. Mr Kelkar wanted the transfer of surplus equity holding to the SPV in which the Government's holding would be 49 per cent. The SPV was envisaged by Mr Kelkar as a non-Government company with the majority stake to be controlled by financial institutions. The board of this AMC was to take all decisions related to pricing, timing and selection of intermediaries for the sale. Since the proposal was first floated over four years ago, the financial institutions themselves have been going through a troubled phase.
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