Race for a flying deal: Govt to bundle ONGC stake for selling Pawan Hans

Pawan Hans
After a lukewarm response from the industry to the sale of its 51 per cent stake in Pawan Hans, the Department of Disinvestment and Public Asset Management (Dipam) is planning to put the entire helicopter company on sale by offering the remaining 49 per cent stake of Oil and Natural Gas Corporation (ONGC) as well. 

Dipam has already floated the bids for stake sale in Pawan Hans twice in the last 10 months. The first bidding floated on October 13 last year was withdrawn on April 6. This was after the two bidders — Indian helicopter major Global Vectra Helicorp and US-based Continental Helicopters — expressed lack of interest. Following this, another bid was floated on April 13, for which four companies have submitted interests as of now.  

The government had invited bids from private companies, including foreign ones, to buy its stake, along with management control, in the helicopter service operator. 

 
According to multiple sources close to the development, bundling the offer with ONGC stake will bring in better valuation for the company. ONGC has started work in this regard. 

For the 51 per cent stake on offer, the government had earlier set a reserve price of about Rs 3 billion. Sale proceeds from ONGC stake would go to the oil major. 

 
The government had appointed SBI Capital Markets (SBICAP) as its advisor to manage the strategic disinvestment process of the company.

Pawan Hans is not part of ONGC’s core business. The company is not keen to run it and it hardly makes any business sense,” said a government official. 

 
As on July 3, the government has realised Rs 87.59 billion as disinvestment proceeds, as against the budget estimate of Rs 800 billion for the financial year 2018-19. The total disinvestment proceeds during 2017-18 was Rs 1 trillion, surpassing the revised target for that year. 

One of the major concerns that the prospective investors had was regarding the largest customer ONGC itself becoming a partner as it may lead to a conflict of interest. 

Pawan Hans was incorporated in 1985 with the primary objective of supporting services to the oil and gas sector and that is how ONGC has got a stake in it.  Earlier, ONGC used to hold only 21 per cent stake in the company, which later increased to 49 per cent through an equity infusion during the first half of the current decade. 

 
Pawan Hans has a fleet of about 50 helicopters and its operations include offshore operations, charter services, rescue works, corporate and special charters and VIP transportation. It has run a profitable operation, registering a profit of Rs 2.48 billion in 2016-17. As on January 31 this year, Pawan Hans has got an authorised capital of Rs 5.6 billion and paid-up share capital worth Rs 5.57 billion.