IDFC Cap, Deutsche Bank among 5 keen to manage RINL issue

Five merchant bankers, including IDFC Capital and Deutsche Bank, have evinced interests to manage Rashtriya Ispat Nigam's initial share sale programme, in which the government intends to dilute 10% of its stake.

Edelweiss Capital, IDBI Capital and UBS Securities are other merchant bankers interested to manage the issue, which is likely to debut on the domestic bourses in the next fiscal, according to a source in the steel ministry.

All the five gave their presentations before an inter ministerial group today, though the final selection would depend on their financial bids to be opened on a later date, the sources added.

The government, in the request for proposals for the appointment of book running lead managers (BRLMs), had said that it would take up to five merchant bankers to manage the issue.

At present, the government holds 100% stake in the company. It is considering to divest 10% stake, or over 48.89 lakh shares having a face value of Rs 1,000 each through the Initial Public Offering.

Each share of the company, however, would be split into 100 shares of face value of Rs 10 each, before the proposed disinvestment to make them more affordable to the investors.

In the request for proposal, the government had laid out a series of preconditions for the bidders to be eligible to manage the issue. This includes at least one domestic equity issue of no less than Rs 500 crore during the last three years.

It had also made it mandatory for the interested parties to give an undertaking, "which certify that as on the date they were not advising any entity which was engaged in the same line of business" as that of RINL, perhaps to avoid a
SAIL-like situation.

The follow-on public offer of SAIL had to be postponed due to a clash of interests of the investment bankers who also took up a same job for Tata Steel.

The matter is to be resolved with the intervention of the Law Ministry.

RINL, which is expanding its steel-making capacity to 6.3 mtpa from 2.9 mtpa, had around 18,000 employees at the end of March 2011.