Finance Ministry To Empanel Merchant Bankers, Law Firms For Disinvestment

The Finance Ministry has invited bids for the empanelment of merchant bankers and legal advisors for assisting the government in CPSE disinvestment transactions, undertaken through offer for sale and stock market dribbling.

The bids have been invited in four categories — A++, A+, A and B, based on the size of the transaction.

To be eligible for empanelment in the A++ category, which is an OFS transaction size of more than Rs 2,000 crore, interested merchant bankers would be required to have completed at least one equity market transaction of the size of Rs 2,000 crore.

For empanelment for managing OFS transaction size of Rs 750 crore to Rs 2,000 crore (A+), and less than Rs 750 crore (A), the interested merchant banker would be required to have managed at least one capital market transaction of Rs 750 crore and Rs 500 crore, respectively, between April 2020 and now.

In the fourth category, which is B, interested merchant bankers would be involved in the sale of CPSE shares on the stock exchanges (dribbling).

The minimum experience for bidders in this category would be of five years in share broking. The bidder should have a minimum net worth (including that of its parent entity) of at least Rs 25 crore.

The merchant bankers and selling brokers would be empanelled for two years.

"The Government of India envisages disinvesting its shareholding in CPSEs through the Offer for Sale through Stock Exchange Mechanism/sale of Shares in the stock market (dribbling) from time to time, for which this Request for Proposal for Empanelment of MBSBs is being floated," the Department of Investment and Public Asset Management said.

The last date for placing bids by merchant bankers and legal advisors is Dec. 28.

The scope of work of the merchant banker with respect to OFS transactions would include conducting market surveys, road shows to generate interest amongst prospective investors.

The merchant bankers would be required to advise on the regulatory norms and assist in securing approval and exemptions, wherever necessary, from regulatory agencies such as Securities and Exchange Board of India, stock exchanges, and the Reserve Bank of India.

"The banker would be advising the government in decision making with respect to 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," said the RFP floated by DIPAM.