India's $10 Billion Share Sales to Lead IPO Revival

By M.C. Govardhana Rangan

Aug. 8 (Bloomberg) -- Bharat Sanchar Nigam Ltd., India's biggest telephone company, and NHPC Ltd. plan to raise more than $10 billion in share sales, leading a revival in offerings as stocks rebound from the worst start to the year in three decades.

The government plans to sell as much as 10 percent of Bharat Sanchar, Chairman Kuldeep Goyal said yesterday. State-run NHPC, India's largest generator of electricity from water, on Aug. 6 sought regulatory approval for a sale.

Finance Minister Palaniappan Chidambaram said July 24 the government will resume asset sales to raise funds for former oil, power and telecoms monopolies. Indian companies have completed the fewest IPOs in three years in 2008 as owners including billionaire Anil Ambani scrapped offers.

``Investors do find comfort with public sector IPOs since most of the companies are long standing and price reasonably,'' said Ravi Sardana, senior vice president at ICICI Securities Ltd. ``Names like BSNL and Oil India are quite well known.''

Bharat Sanchar, known as BSNL, is valued at about $100 billion, finance director S.D. Saxena said yesterday. That's a third more than the combined market value of Bharti Airtel Ltd., Reliance Communications Ltd., and Idea Cellular Ltd., India's largest listed telecommunications companies.

The government revived plans today to sell shares in Punjab & Sind Bank, a state-owned lender based in India's northern region. The timing of the sale will be decided later, cabinet spokesman Kapil Sibal said in New Delhi.

Canceled Offerings

Reliance Infratel Ltd., a telecommunications tower company controlled by Ambani, and real estate developer Emaar MGF Land Ltd. were among companies that canceled offerings in the first six months as the benchmark Sensitive Index slumped 34 percent, the biggest first-half drop since it was created in 1979.

Ambani's Reliance Power Ltd. has declined 41 percent since the utility sold shares in January. Reliance Power gave additional shares to investors after the stock sank on debut.

The Bharat Sanchar offer may be the biggest by an Indian company and eclipse the $2.4 billion raised by the government in March 2004 by selling Oil & Natural Gas Corp. shares, a record for a state-run company.

``Investor appetite is all in the pricing,'' said S. Subramanian, head of investment banking at Enam Financial Consultants Ltd. ``Going by the past, the government should be able to give attractive pricing.''

Prime Minister Manmohan Singh is reviving sales after winning a confidence vote in parliament triggered by the withdrawal of support of communist parties. The communists had opposed asset sales and the opening up of banking, insurance and pensions to foreign investment.

Secure Approval

Still, the government will need to secure approval from unions to complete the offerings. Bharat Sanchar's labor groups have rejected an offer that would have given each of the company's 300,000 employees 500 shares at 10 rupees apiece, the Economic Times reported earlier today.

Communications Minister Andimuthu Raja said yesterday the government would give the shares to employees to secure support, as it needs to complete the offer before Singh's term ends in May. The government also plans to sell shares in exploration firm Oil India and Rites Ltd., the company involved in transport and infrastructure technology.

``We have done enough issues in the past in a short time and we can do it again,'' said Enam's Subramanian, who plans to bid to manage the state-run companies' share sales.

To contact the reporters on this story: M.C. Govardhana Rangan in Mumbai at grangan@bloomberg.net.