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The ups and downs of India's privatisation programme combined with a weak domestic stock market have cast a cloud over the use of international equity markets by Indian companies.
It took the authorities three attempts to float international telecom operator Videsh Sanchar Nigam, while the decision to postpone the Gas Authority of India sell-off in November at a time of acute market disruption caused widespread dismay.
The fact that the authorities succeeded in selling $358m of stock in domestic telecom operator Mahanagar Telephone Nigam earlier this month was thus all the more welcome.
The handling of the offering showed a pragmatism and flexibility that had been notably lacking in the past. And it overcame a combination of domestic political upheaval and Asian financial market turmoil that many bankers believed would scupper the deal.
But any hopes that the MTNL issue may herald a renewed boom in Indian international equity and convertible bond issuance are probably premature.
Investors have been burned by their participation in many previous offerings and issuers are in mood to tap the market while domestic stock prices are so low. As for the investment bankers, they have learned that quality is preferable to quantity.
Much was riding on the success of the Gas Authority of India's (GAIL) proposed $500m to $700m partial privatisation GDR in November. The government was eager for it to succeed, first and foremost, because it had pledged to raise Rp70bn ($1.93bn) this fiscal year through a series of disinvestments -- Indian for privatisation - in public sector utilities (PSUs).
A revenue-challenged finance ministry had earmarked most of the projected receipts for its attempt to keep the fiscal deficit to its 1997-98 target of 4.5% of GDP.
GAIL was to be the second PSU sale of the year - following the $448m GDR offering for telecommunications company Videsh Sanchar Nigam (VSNL) in March.
It was the more important of the two because it was to herald three further large disinvestments in Mahanagar Telephone Nigam (MTNL), the Indian Oil Corporation (IOC) and the Container Corporation of India.
Investment bankers were also anxious for a smooth offering. Not only would the three global coordinators in the deal - BZW, Jardine Fleming and Morgan Stanley Dean Witter reap obvious short-term...