SAIL FPO likely in January

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The Steel Authority of India (SAIL) follow-on public offer (FPO) is likely to hit the market only in January, according to Steel Ministry officials. With a number of modalities yet to be completed, the FPO issue could be postponed to January instead of the target date of November.

"The company does not immediately require funding so even if the FPO is postponed to January there should not be any problem. We are not looking to rush the share sale process and we will do it when the market conditions are right," a ministry official told Business Line.

Share sale process

SAIL needs to trim the size of its board and induct two independent directors before the share sale process. This would require clearances from the Prime Minister's Office and the Appointments Committee of Cabinet. If this process is not completed by the end of November, the Ministry will push back the share sale of the company to January.

"Western countries go on a Christmas break so if we aren't able to complete all necessary requirements before that we would start the share sale process in January," the Ministry official added.

Evaluation

Meanwhile, SAIL began evaluating presentations from the 17 merchant bankers in the fray to manage the share sale process. The presentations from bankers including the likes of Goldman Sachs, Credit Suisse Securities, SBI Capital Ltd and others will be held over August 31 and September 1. SAIL will then select a team of six merchant bankers to handle the first tranche of the share sale process.

The two-phase FPO of SAIL is expected to raise a total of Rs 16,000 crore. In each phase, the Government will sell 5% of its equity in the company while an additional 5% of fresh equity will be issued.

SAIL wants to part-fund its Rs 70,000-crore expansion programme with the proceeds from the share sale, while the Government wants to meet its disinvestment target of Rs 40,000 crore for the current fiscal.

Taken From

The Hindu Business Line