 OVERVIEW
OF THE PRIVATISATION PROCESS
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Proposals
for disinvestment in any PSU, based on the recommendations of the Disinvestment
Commission or in accordance with the declared Disinvestment Policy of the
Government, are placed for consideration of the Cabinet Committee on Disinvestment
(CCD). |
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After
CCD clears the disinvestment proposal, selection of the Advisors is done
through global competitive bidding process for assisting in the implementation
of the disinvestment decision. |
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The
Advisors assist the Government in issue of advertisement in leading national
and international newspapers/magazines/journals, for inviting Expression
of Interest (EOI) from Prospective strategic Partners. In some cases, to
expedite disinvestment, EOI advertisements have been issued before appointing
Advisors. |
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After
receipt of the EOI, Prospective Bidders are short listed, according to the
pre-qualification criteria in EOI advertisement. |
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The
Advisors, after due diligence of the PSU, prepare the Information Memorandum
in consultation with the concerned PSU, which is given to the short listed
Prospective Bidders, after they have entered into a Confidentiality Agreement. |
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The
draft Share Purchase Agreement and the Shareholder Agreement are also prepared
by the Advisors, with the help of the Legal Advisors, and given to the Prospective
Bidders for eliciting their reaction. |
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The
Prospective Bidders undertake due diligence of the PSU and hold discussions
with the Advisors/the Government/the management of the PSU for any clarifications.
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Concurrently,
the task of valuation of the PSU is undertaken in accordance with the standard
national and international practices. |
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Based
on the response received from the Prospective Bidders, the Share Purchase
and Shareholders Agreement is finalised and vetted by the Ministry of Law
and approved by the Government and is then sent to the Prospective Bidders
for inviting the final binding bids (Technical and Financial). |
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After
examination, analysis and evaluation, the recommendations of the Inter-
Ministerial Group (IMG) are placed before the CCD for a final decision regarding
selection of the Strategic Partner, signing of the Share Purchase or Shareholders
Agreements and other ancillary issues. |
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In
case the disinvested PSU's shares are listed on SE, an open offer would
be required to be made by the bidder before closing the transaction.
In
the disinvestment process mentioned above, Department of Disinvestment
is assisted at each stage by an Inter Ministerial Group (IMG) comprising
officers from the Ministry of Finance, Department of Public Enterprises,
the Ministry concerned with the PSU apart from the Advisors.
The
process flow chart on the next page shows the various stages of a typical
privatisation transaction through strategic sale route.
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