PART - III - Udyog Bandhu

1. Strategic sale experience2. Sector expertise and experience3. Local presence and level of commitment to India4. Understanding of the PSE5. Deal team and manpower commitment6. Research capabilityB. Public offerS.No Criteria1. Experience and capabilities in handling similar transactions as Advisors/GlobalCoordinators2. Sector expertise and experience3. Understanding of the PSE4. Deal team qualification and Manpower commitment to the Deal5. Marketing strategy & after market support6. Local presence and commitment to India7. Global presence and distribution capabilities8. Research capabilitiesA typical letter of mandate to be signed between the Advisor and the Government isenclosed at Annexure – I. This may require some modifications depending on the nature oftransaction.Government of India has also issued guidelines for qualifications of Advisors asenclosed at Annexure – II which are to be followed in the State as well.For strategic sale the fees payable to the Advisors is generally of two types. The firsttype is called 'success fee' which is a fixed percentage of the gross proceeds to be received bythe Government from the disinvestment. Since it is directly linked with the amount of moneyrealizable from disinvestment, it serves as an incentive to the Advisor to get the best price fromdisinvestment.The other type of fee is called 'drop dead fee' which is a lump sum amount payable tothe Advisor only in the event of the transaction being called off by the Government.The fees for specific transactions vary from transaction to transaction depending onvarious factors like mode of disinvestment, total realizable value, quantum of work required tocomplete the transaction, degree of difficulty and chances of success of the transaction etc.Consultants appointed for disinvestment in certain cases are also given flat / fixed / lump sumfee / asset valuation fee / out of pocket expenditure depending on different criteria.4.2 Legal AdvisorFor each privatisation, it is considered necessary to involve legal advisors who look into thelegal issues and advise the government with respect to documentation etc. on contractual terms.They are invited on the basis of their work experience and are selected through a process oflimited competitive bidding by an Inter-department Committee, from a panel suggested /recommended by the Advisors, and are paid a lump sum amount as fees. They help theGovernment in drafting and finalising various agreements.72