CareEdge sees Rs 11.5 trillion divestment potential

A total divestment potential of approximately Rs 11.5 trillion at current market capitalization is estimated, assuming the government retains control over the company's governance by maintaining at least a 51 per cent stake in these public undertaking companies and divests any excess shares, according to CareEdge Ratings.

Disinvestment or divestment typically refers to the sale by the government, partly or fully, of a government-owned enterprise.

As per CareEdge Ratings, the estimate is a little more than twice the total divestment of Rs 5.2 trillion conducted since 2014.

Of this Rs 11.5 trillion divestment potential, public sector enterprises could contribute around Rs 5 trillion, while public sector banks and insurance firms could potentially add another Rs 6.5 trillion.

This represents the maximum amount that could be raised at current market prices without the government losing governance control of these entities, the rating agency said in a report this week.

However, the government may not opt to divest all its potential and the decision to divest such listed firms may be influenced by the industry's strategic nature, the companies' profitability, financial market conditions and welfare/social considerations.