Govt. gets financial bids for Pawan Hans stake

The government has received an undisclosed number of financial bids for sale of its stake in ailing helicopter operator Pawan Hans, moving the divestment process to the last stage.

“The financial bids for Pawan Hans disinvestment have been received by the transaction advisor. The process now moves to a concluding stage,” DIPAM Secretary Tuhin Kanta Pandey tweeted.

He, however, did not disclose the number of bidders.

The government is selling its entire 51% stake in Pawan Hans. State-owned Oil and Natural Gas Corporation (ONGC), which holds the remaining 49%, has also offered its entire shareholding in the company for sale along with the government stake.

Set up in 1985, Pawan Hans has a fleet of over 40 helicopters and over 900 employees, less than half of them on permanent roles. It provides helicopter services for the exploration activities of ONGC and to India’s northeast.

For 2019-20, the company reported a net loss of ₹28 crore, lower than ₹69 crore in the previous year. As on March 31, 2020, its authorised capital stood at ₹560 crore and paid-up share capital at ₹557 crore.

In 2018, the government had invited bids to sell its stake in Pawan Hans. However, the process was withdrawn after ONGC decided to sell its 49% stake in the company along with the government’s. In 2019, a second attempt was made to sell the company but it failed to receive investor response.

Last year, the government sweetened the terms, reducing the minimum net worth for potential bidders and the lock-in period of investment and allowing the successful bidder to sell assets after a year. Previously, the sale terms allowed the successful bidder assets two year after acquisition.

Also, a change in shareholding among consortium partners was permitted, provided the lead investor holds a minimum of 26% stake and other members hold at least 10% each. The lock-in period for investment was also reduced to one year from three years earlier.

However, a new clause of business continuity was added to ensure that the successful bidder will not liquidate or close down the business for three years. The minimum net worth of bidders has also been reduced to ₹300 crore from ₹350 crore earlier and the profitability criteria has been abolished to increase the universe of the bidders.

In February this year, the government received multiple preliminary bids for its privatisation process. The bidders thereafter did due diligence of the company and have now submitted financial or price bids.

The disinvestment is part of the ₹1.75 lakh crore revenue mobilisation target set by the government for the 2021-22 (April 2021 to March 2022) fiscal year. So far, the government has garnered Rs 9,330 crore from minority stake sales.

In October, the government sold Air India to Tata Group at an enterprise value of ₹18,000 crore, the first major privatisation step in about two decades. The government will get ₹ 2,700 crore cash from Tatas for sale of its 100% stake.