Government Seeing Listing Opportunities For PSU Green Energy Units, Says DIPAM Secretary

The government has been encouraging and asking state-owned companies to create green subsidiaries and sees the opportunity to capitalise on them through capital markets or initial public offerings, said Tuhin Kanta Pandey, secretary of the Department of Investment and Public Asset Management.

“There are opportunities for subsidiary units of some major listed government-owned entities to come to the capital markets,” Pandey said in a virtual briefing at the Assocham Capital Markets Summit in Mumbai on Friday.

The government has been taking various measures to reduce the carbon intensity of the economy and has kept 2070 as the target to meet its net zero goals, as announced by Prime Minister Narendra Modi.

“Swift transitions have been taking place in the energy space. Many of the PSU energy companies, which were earlier based on carbon, are increasingly becoming green by creating subsidiaries for the green assets, which have tremendous growth options. We have been encouraging PSUs to create green subsidiaries and capitalise them,” he said.

The monetisation of these units or assets could be done through initial public offerings, the secretary said.

Many PSU stocks have rallied significantly over the last year, with the sectoral index outperforming the benchmark Nifty. The outperformance of PSUs is due to earnings per share upgrades and return on equity improvements, according to Jefferies.

Public assets have continued to perform well and have given value to shareholders, which shows the value optimisation of the policies that have been consistent in nature, Pandey said.

“Government-owned institutions’ market capitalisation has grown about four times in the last three years to about Rs 58 lakh crore,” he said.