In a bid to ensure greater retail participation in its disinvestment programme, the government has decided to pay a commission to brokers for luring investors to initial public offerings (IPOs) of public sector undertakings (PSUs).
Starting with the public issue of Satluj Jal Vidyut Nigam Ltd. (SJVNL), which opens for subscription on Thursday (April 29), the government has fixed a commission of 0.35 per cent for brokers for selling shares to retail investors and 0.15 per cent for bringing in HNI (high net worth individual) clients.
Revealing this to the media on the eve of the Satluj Jal Vidyut Nigam issue, Disinvestment Secretary Sumit Bose said: “After consulting with brokers, we have done the changes and the commission for brokers have been fixed at 0.35 per cent for retail investors and 0.15 per cent for HNIs.”
Hitherto, the commission paid by the government was included in the fees of the book running lead managers (BRLMs). “Now, the government will reimburse this commission to the BRLMs for the brokers...
“The new norm will be applicable to all subsequent issues, starting with SJVNL,” Mr Bose said, while noting that the changes have been effected to attract more retail demand in public offers.
SJVNL price band
The Satluj Jal Vidyut Nigam issue is the first public offering this fiscal under which the government is set to offload 10 per cent of its equity (41.5 crore shares) in the joint venture public sector unit at a price band of Rs.23-26 per share to mop up about Rs.954-1,079 crore.
A discount of 5 per cent per share would be offered to retail investors as well as Satluj Jal Vidyut Nigam employees.
The Iinitial Public Offer is to close on May 3.
While the Centre's stake in the power joint venture is 74.5 per cent, the balance 25.5 per cent is held by the Himachal Pradesh Government.
