Govt mulls buyback route for Nalco, BHEL stake sale

The government is planning to opt for the buyback route, instead of an offer for sale (OFS), for divesting its stake in Bharat Heavy Electricals (BHEL) and National Aluminium Company (Nalco) so that it can get higher prices from the stake sale. The government expects to garner around R9,000 crore from these buybacks whereas OFS is likely to fetch R5,600 crore at the current market valuations. The government plans to sell 10% of its stake in BHEL, while it is expected to divest 25% of its stake in Nalco. According to Sebi norms, a company is free to fix the maximum price for the buyback and this price is independent of stock market performance. The final buyback price is usually 20-30% higher compared the current share price. For instance, during the recent buyback of Pipavav Defence, the company offered a 27% premium to the last trading price(as on date of buyback announcement). ref: http://www.financialexpress.com/article/markets/indian-markets/govt-mulls-buyback-route-for-nalco-bhel-stake-sale/203153/