SBI Capital, Anarock, KPMG, 8 others to provide transaction advisory services for asset monetisation of CPSEs

In batch to generate income from assets Central public sector organizations (CPSEs), the center has formed 11 companies to provide consulting services. Monetization is key to divestment as non-core assets are taken and sold or leased separately for better valuation.

companies include Subsidiary Body for Implementation Capital Markets Limited, CBRE South Asia Private Limited, Ernst & Young LLP, Cushman Wakefield India Private Limited, KPMG Assurance and Consulting Services LLP, Deloitte Touche Tohmatsu India LLP, Colliers International (India) Property Services Private Limited, Anarock Property Consultants Private Limited, Jones showed Lang La Salle Real Estate Consultants (India) Private Limited, Darachou & Company Private Limited and Real Estate Limited an order issued by the National Land Monetization Corporation (NLMC).

in february, The agency put forward a request for training Advisory Firms To provide advisory services on transactions to monetize assets of CPSE companies and other government agencies. The selected companies will assist NLMC in “formulating monetization strategy, conducting technical and economic feasibility studies for each of the assets, providing advisory services for end-to-end transactions and ensuring completion of transactions in order to monetize the assets.”

The order document stated that many of these non-core assets are diversified and spread across the country and are optimally used and can be appropriately monetized to create financial leverage and greater value for companies and the government, as the shareholder.

Interestingly, Union budget for fiscal year 24 Silent about monetization. The budget also lowered the estimate under ‘Miscellaneous Capital Receipts’ to Rs.61,000 crore in FY24 from Rs.65,000 crore for FY23 (BE), although it is slightly higher than the revised estimate of Rs.61,000 crore.

Diversified capital receipts consist of sale of a portion of government equity in CPSE, strategic divestment, monetization and other similar transactions. Also, being the last year before the before, the experts don’t see much action on monetization, still moving to empanel advisors seen as intent on a big monetization drive.

NLMC undertakes to monetize surplus land and construction assets of the project and other government agencies. The establishment of this authority comes in implementation of the announcement of the 2021-2022 budget. By converting non-core assets into cash, the government will be able to generate significant revenues by monetizing unused and insufficiently utilized assets and at the same time converting surplus funds from land and non-core assets will help unlock the value of CPSEs, going for strategic investment.

During the budget session, answering multiple questions, Minister of State for Finance, Bhagwat Kishanrao Karad, said in the Lok Sabha that no specific target has been set for the monetization of non-core assets for the financial years 21-22 and 22-23. For the underlying assets, according to information from NITI Aayog, sectoral targets have been set for various ministries including the Ministry of Roads, Ministry of Railways, Ministry of Energy, Ministry of Maritime Transport, Ministry of Civil Aviation and Ministry of Oil under the National Transformation Pipeline (NMP).

“During the 22-23 financial year, based on updates collected from line ministries and departments till the end of January 31, 2023, proposals with a monetization value of around Rs. 76,000 crore were completed by various ministries and submitted for review,” Karad said in a written response. Speaking of FY22, Karad reports that transactions with a total income generation value of around Rs.97,000 crore in terms of receivables or own investments have been completed.

Launched in August 2021, NMP aims to enable accelerated infrastructure construction and achieve efficiencies in infrastructure operation and maintenance for a multiplier effect on the economy.