Minority stake sale
Topic: Industrial Policy, Public Sector, MSMEs and Disinvestment · NCERT: Beyond NCERT
Meaning
A minority stake sale is a form of disinvestment, meaning the sale of government shares in a public sector enterprise. In a minority stake sale the government sells only a minority share. It keeps majority ownership and management control. The money raised is a non-debt capital receipt: income that does not add to government borrowing. The firm stays a public enterprise. Common routes are an IPO (first public share issue), an FPO (a later public issue), an offer for sale (OFS) through stock exchanges, exchange-traded funds such as the CPSE ETF and Bharat-22 ETF, and share buybacks.
Example
The LIC IPO (2022) sold a small part of the government's stake in LIC to the public. The government still holds the majority and controls LIC.
Don't confuse with
- Strategic sale: In a strategic sale the government sells a substantial stake (50% or more) and hands over management control, as when Air India went to the Tatas in January 2022. In a minority stake sale, control stays with the government.
Related concepts
- Central public sector enterprise
- Maharatna, Navratna and Miniratna status
- Maharatna status
- Navratna status
- Miniratna status
- Disinvestment
- Strategic sale
- Strategic sector (public enterprise policy)
- Golden share