After the recent psu issue ie Power Finance Co which saw an Over subscription of 6 times from QIBs, 2 times from public and 1.2 times from NIIs, i wonder how many issues the govt can push through on its own terms as it will soon face another impossible trinity of :-
1. Very high oil prices , increase in subsidy bill and high fiscal deficits which directly leads to double digit inflation and interest rates.
2. Being cash strapped and wanting to finance its ballooning fiscal deficit and debt burden through PSU Disinvestment on its own terms , that too at close to market prices.
3. Using PSU companies as cash cows to bear subsidy burden , and increasing the burden on said shareholders resulting to crash in share prices of PSU Scripts.
One wonders how?
The solution is simple … look at QIB for subscription….
When there is LIC and Domestic Govt Institutions that are ready to bail it out and take losses on books everything is possible.
But then again will it be true disinvestment ? and why the drama?
Here are some stats:-
|Equity||Issue Price||Current Price||%Gain/Loss|
|Punjab & Sind||120||99||-17.5|