Govt to divest 5% in SAIL via FPO

The government will offload 5% stake in Steel Authority of India Ltd (SAIL) . A follow-on public offer (FPO) is expected to come up for Cabinet approval by this month end. CNBC-TV18's Abhijit Neogy reports.

SAIL Chairman SK Roongta, in an exclusive interview with CNBC-TV18, said that the government would offload 5% of its stake in the company, following which the company many issue another 5% fresh equity later. The total offloading may be to the tune of 20%, he said, which would be carried out in two tranches.

The government's current holding in the company is about 85.86%. After the entire divestment, it would come down to about 68% or around 69%.

The government expects to raise about Rs 8000 crore based on current market capitalization of the company.

The company may use part of the funds for capital expansion and to reduce debt. It is learnt that the Steel Minister has already signed this proposal and it is now with the Department of Disinvestment from where it will go to the Cabinet as early as the month end.