SBI Caps may win mandate to advise govt on BEML divestment

Dhirendra TripathiMoneycontrol NewsSBI Capital Market Services is set to get government’s mandate to advise it on the strategic stake sale in BEML, an investment banker with one of the bidders told Moneycontrol. The merchant banking arm of the country’s largest bank beat Kotak Securities, Axis Capital, ICICI Securities and the big four consulting firms to emerge as the lowest bidder in the tender.As transaction advisor, SBI Caps will manage the stake sale process and assist the department of investment and public asset management derive the fair reserve price to get optimum proceeds from the divestment.The government plans to sell 26 percent of the mini-ratna company’s equity from its own holding to a strategic investor. It holds 54.03 percent stake in the company whose equity comprises 41.64 million shares. At today’s traded price of Rs 1,306, the company has a market capitalisation of Rs 5,438 crore.As per SEBI norms, the successful bidder will have to make an open offer for acquiring an additional 20 percent stake in the company.  The Bengaluru-based public sector company caters to mining and construction industry, railways, defence and aerospace. It makes earth movers – its earlier name being Bharat Earth Movers – coaches for metro and railways, wagons, armoured recovery vehicles, multi-purpose weapon loaders aircraft towing tractors. It is under the administrative control of ministry of defence.The government hopes to raise Rs 72,500 crore from divestment of its stake in various public sector companies in the next financial year (FY18). Of this, it is targeting Rs 15,000 crore via strategic divestment, Rs 11,000 crores from listing of public sector insurers and Rs 46,500 crores from minority stake sales.  Media reports suggest BEML divestment has attracted interest from Larsen & Toubro, Germany’s Siemens and Japan’s Mitsubishi. Other Indian companies like Mahindra & Mahindra and Reliance Defence and the Tatas can’t be ruled out from throwing in their hat.