Which type of sale allows partial transfer of PSU ownership to private hands?
Show answer & explanation
Correct answer: A
Explanation
The correct answer is option 1 i.e. Minority sale.
A Minority sale (also known as minority stake sale) occurs when the government sells a portion of its shareholding in a Public Sector Undertaking (PSU) to private investors, while still retaining a majority stake of at least 51%. This allows the government to raise capital and improve market discipline without losing management control. Under this model, the PSU remains a government company because the state continues to hold the dominant ownership and decision-making power.
Other options:
-
Complete sale: This involves the total transfer of 100% government ownership and control to a private entity, ending the public nature of the company.
-
Auction: This is a method of sale where assets or shares are sold to the highest bidder, but it does not specifically define the "partial" nature of the transfer.
-
Leasing: In this process, the government retains ownership but grants a private player the right to use and operate the PSU's assets for a specific period.