Thread on PSU - article I authored in today's Economic Times : Can Bharat-COIN help Government beat disinvestment blues? We evaluate if there can be a win-win approach to raising resources for govt, minority shareholders as well as not extracting a high cost of capital to economy
1.All market participant know PSU have eroded significant wealth in last 5 years, PSU etf is down 16% as against a 50% rise in Nifty. But did you know that govt raised almost 3.1 lakh crore in disinvestment, govt has similarly infused 3lakh crores in pay banks in same time period
2. After such large stake sales & massive fall in PSU, govt residual stake (if they retain 51%) is 1.2 lakh crores, given disinvestment target of 1 lakh crores, this approach of stake sale need to be re-evaluated. In that context, complete exit like bpcl, concor r very welcome
3. But,this 3.1 lakh crores is almost 30% of institutional money flows (FII/MF/Insurance) over the last 5 years!India Inc is going thru massive de-leveraging, as they raise equity for excess of prev eco cycle. This 30% share for disinvestment crowds out significantly equity flows
4. Also in an environment where India Inc deleverages & consumer sentiment is still soft, eyes are on govt to re-leverage and front load investment to kickstart economic cycle
4. So what is Bharat-COIN? A loose acronym of larger PSU (coal, ongc,ioc,ntpc, hence COIN) along with others like GAIL,BEL,HAL,NMDC,power grid. These companies have consistently given 50k+ Cr dividend every year and govt stake in the share of dividend has been 25k crores
5. Bharat-COIN is a legal structure similar to REIT/INVIT where the dividend from their underlying goes to coupon holders that get a dividend. Similar to INVIT, these coupons of 25k crore can fetch, say at 8%, raise 3 lakh crores
6. While am no economist, since the govt doesn't guarantee any coupon, so in that sense this borrowing will not reflect in govt deficit calculation. So the question for buyer of Bharat-COIN is comfort on dividend pools and if it can give at least their "indicative" coupon?
7. Good thing about this basket is they are diversified(some benefit with higher energy prices, some with lower energy etc). Also, many of these companies are all significantly net cash companies, so in say, a bad year they can raise debt on their B/S.
8. Of course, this raise of 3 lakh crores need to be repaid at end of say, 10 years. In the article, we evaluate avenues of repayment. In any case, once market gains confidence that there is no risk of repayment, these will be refinanced like other govt debt
9. Moving from targeting more expensive equity flows to debt flows as a segment, where foreigners can also participate as well as ability for leveraged structure to participate can help attract flows at much finer rates than what is discussed in this theoretical example of 8%
End of thread! 
*Govt has infused 3lakh crores in psu banks
