India’s market regulator allowed company owners to auction their stakes to investors instead of selling shares in public offerings, according to an official from the regulator.
The Securities & Exchange Board of India approved the plan at its board meeting in Mumbai today, said the official, who declined to be identified before a public announcement. The board also approved changes to rules to allow companies to buy back shares from founders, the official said.
The decisions by the regulator is expected to help Finance Minister Pranab Mukherjee meet the 400-billion rupee asset sale target for the fiscal year ending in March. Last year’s slide in stocks forced him to delay selling shares of Oil & Natural Gas Corp., Steel Authority of India Ltd. and Indian Oil Corp.
“The government could reduce the budget gap by selling shares of state-owned companies through open auction, while financial institutions may get better prices,” said R.K. Gupta, managing director at Taurus Asset Management Ltd., which manages 46 billion rupees of assets, said from New Delhi today. “Promoters will save on costs and hassles by avoiding public offerings.”
N. Hariharan, a spokesman at Sebi, didn’t respond to a text message sent to his mobile phone and an e-mail.
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