The Cabinet Committee on Economic Affairs (CCEA) approved the sale of the government’s remaining stake in Hindustan Zinc Ltd, as the Centre looks to accelerate its disinvestment drive, reports Business Standard.
The sale of the entire 29.5 per cent stake in HZL would fetch the Centre ₹38,062 crore according to the closing price of the company’s shares on Wednesday.
The government may sell its stake in tranches through an offer for sale (OFS), and the same will be structured by the Department of Investment and Public Asset Management (DIPAM), an official said. This will help the Centre in moving closer to its ₹65,000-crore divestment target for financial year 2022-23.
The Centre has so far garnered ₹23,575 crore in the current financial year in divestment proceeds through the initial public offering (IPO) of Life Insurance Corporation of India (LIC) and the offer for sale of Oil and Natural Gas Corporation.
In 2002, the government had sold 26 per cent of its stake in HZL to Vedanta’s Sterlite Industries. The group then acquired an additional 20 per cent through an open offer.
In 2003, an extra 19 per cent was bought by the Anil Agarwal-managed conglomerate. In 2009, the company exercised a call option according to the share purchase agreement, which was contested by the Centre.
This led to Vedanta invoking arbitration to claim settlement. The conglomerate recently withdrew the arbitration proceedings, clearing the way for the government to sell its 1.24 billion shares in HZL.
At present, Vedanta owns 64.9 per cent in HZL. Agarwal has reportedly said the company can just buy the Centre’s 5 per cent stake after considering the price of the shares on offer.
In November last year, the Supreme Court had allowed the Centre to sell its residual stake in HZL, noting that the company was no longer a public sector undertaking (PSU). The Centre in its affidavit had earlier said the residual shareholding of 29.54 per cent would be sold in the open market.
Though the sale of the residual stake in the company was not questioned, the apex court had directed the CBI to investigate the initial transaction under which the Centre had sold 26 per cent in HZL and enabled its eventual privatisation.