Air India to appoint transaction advisors to sell securities of its staff PF Trusts
Ahead of the completion of disinvestment process, Air India has floated Request for Proposal (RFP) to appoint transaction advisors for sale of securities of AIEPF (Air India Employees Provident fund) and IAEPF (Indian Airlines Employees Provident Fund). These two funds have total investment of around ₹4,500 crore.
RFP has to be submitted by October 18.
These two funds have been recognised under Provident Fund Act 1925. Now, with completion of disinvestment process and when Air India ceases to be a Central Public Sector Enterprise, the new company as private entity will be compulsorily covered under Employees Provident Fund and Miscellaneous Provisions Act, 1952 unless specifically notified by the Central government as an exempted Trust.
The airline has already initiated the process of shifting employees from existing PF system to new system and present move of appointing transaction advisor to sell securities of the present trust is one more step in this process.
“The transaction advisor will propose the process under which it intends to sell all the securities of the Trust. Once the individual Trusts are satisfied with the suggestions, and provide a final approval to the proposed method, the Advisor will go ahead and execute the plan proposed and approved. Both the advisors shall severally/jointly advise on the transaction, best methodology and timing for sale of the investments of the trust,” the tender notice said.
Advisors will guide Trusts
Selected advisors will guide PF trusts for the process to be adopted for sale of securities. They will be floating shortlisted securities of the PF trusts and invite maximum possible best responses from the market. They will conduct price negotiation with market intermediaries/brokers to close the transactions at the best possible price. A timeline has also been drawn which says they will have to gather relevant data and strategise the plan of execution within 10 days from the date of award of assignment. Once it is completed, sale of securities will need to be executed on a best effort basis.
As on August 31, out of total corpus of AIEPF, share of Special Deposit Scheme (SDS) was 8.85 per cent while 68.75 per cent and 22.4 per cent were invested in Central and State Government bonds and corporate bonds, respectively. For IAEFF, 13.35 per cent of total fund was deployed in SDF, while 45.93 per cent, 39.28 per cent and 1.44 per cent were parked in Central & State Government bonds, Corporate Bond and Equity respectively.
Earlier in July, Air India asked its employees to voluntarily move to the EPF & MP Act 1952 before August 9. At the same time the employees asked the government to compensate them while shifting them to the new act. For the transfer to EPFO, accumulation of each employee along with cash would be required to be transferred to EPFO. This would entail the requirement of premature liquidation/sale of Securities held by the Trusts. This exercise may result in surplus/ shortfall in the corpus depending on market conditions.
Ministerial panel meet
Meanwhile, an inter-ministerial group headed by Home Minister Amit Shah is expected to meet on Wednesday to take a call on final bidder for Air India. Other members of the group, known as the Air India Specific Alternative Mechanism, include Finance Minister Nirmala Sitharaman, Commerce Minister Piyush Goyal and Civil Aviation Minister Jyotiraditya Scindia.
The group will consider recommendations by Secretaries panel headed by Cabinet Secretary. There are two bidders in the final fray – Tata Group and SpiceJet’s Ajay Singh in his personal capacity. Reports suggest Tata is frontrunner.