Institutional foreignThings should happen this time

Mid-October will be the largest placement of titles never seen in India, with the introduction on the stock exchange of 10 of Coal India, world's leading producer of coal. Iconic, this operation will be followed by many others. In lack of funds, the Government has indeed implemented a policy supported partial privatization. The objective is to award all of the public enterprises which are not, provided that they are profitable. The most often proposed introductions include 10 of the shares. For those who are already listed, sometimes with a tiny fraction of the capital on the market, the idea is to float it to at least 10.

Forced the prudence of the fact of the hostility of some of its majority and its allies to any which may look like in wild liberalism, the Government asked for strict limits: no question of relinquishing control of a public company, sale of limited portions of titles, use of funds collected to finance social welfare programs for the poor. Remains that Indian public sector is so large that simply placing on the market of 10 of the public companies is of very large calls for funds.

60 companies involved

It is estimated that some 60 companies are potentially affected, including giants of energy, natural resources or the telecoms. For the single year in progress at end of March 2011, public authorities sought to raise 7 billion euros.

After Coal India, expected as the Hindustan Copper copper producer. Already listed, it could be the subject of a double operation: sale by the State of 10 of the shares, capital increase of 10 also. Which could yield nearly EUR 700 million to public finances. Steel producer SAIL (Steel Authority of India), in which the State has 86, could follow the sale of 5 of the capital by the State and a capital increase of 5. A double operation that could lift 1.3 billion euros.

Also in the running for a call to investors prior to March 31: Indian Oil Corp and Oil and Natural Gas Corp energy groups. The Government could sell 10 of the first, with a capital increase of the same level, while the second would be affected in the amount of 5. Potential gain for public finances: the order of EUR 4.4 billion.

To this surging, private companies will be still present: between the small, large, the public and the private, "we expect at least fifteen to twenty entries in the stock market in the last quarter of the year," said Chetan Majithia, responsible for actions in the Group & Standard Poor's rating agency Crisil. Will this not be done The privatizations carried out in the first quarter of 2010 have been laborious. The most obvious failure: in February, the placing on the market of 5 of the NTPC power producer has been no demand on the part of individuals or institutional foreigners. Bankers and Indian public insurers had to pick up the paper...

Institutional foreign

Things should happen this time. "Early 2010, individuals were not there because they were burned fingers, said Chetan Majithia, but today, confidence in the economy is very strong and you will see many investors come forward." Similar sentiment in a European banker in Bombay: "institutional foreigners are very present, with 17 to 18 billion dollars in net purchases since the beginning of the year, he says, is very substantial." In fact, introductions made during the summer have been a success, like that of SKS Microfinance, microcredit specialist, subscribed more than thirteen times.

Today, the mood on the market is the fixed beau, Bombay in the highest two years and a half ("Les Echos" September 8). Overall, the fundraising on the Indian stock market could settle to 23 billion euros in 2010, compared to 12 billion last year.