EGoM clears 3.56% stake sale in Neyveli via IPP

A panel of ministers, headed by Finance Minister P Chidambaram, today cleared disinvestment of 3.56% stake in Neyveli Lignite through institutional placement programme (IPP) and the issue is likely in the first week of August.

The Department of Disinvestment (DoD) has originally planned to divest 5% of its stake in the Tamil Nadu-based mining company. The Cabinet had last month approved the same.

Since the IPP mode is allowed only to meet the pubic holding norm minimum 10%, the department would now sell only 3.56% or over 5.58 crore shares.

"The EGoM approved 3.56% disinvestment in Neyveli Lignite though IPP," Disinvestment Secretary Ravi Mathur told reporters after a meeting of the Empowered Group of Ministers (EGoM).

The DoD has written to Sebi seeking preference to Tamil Nadu state PSUs, he said, adding that the Department would now file the offer document with Sebi and after that the issue would hit the market.

Sources, however, said that the issue is likely only in the first week of August.

Government holds 93.56% stake in Neyveli Lignite Corp (NLC).

Shares of NLC closed at Rs 59.80 on the BSE, down 4.24% from its last close on BSE.

Market regulator Sebi had earlier this month given its consent to Tamil Nadu government's proposal to buy Centre's entire shares on offer in NLC provided the acquisition is done by a qualified state entity through the IPP route.

The TN government has said it has 5 state PSUs which can be qualified as QIBs. The DoD has sought exemption from Sebi so that prefernce is given to allot shares to these PSUs only.

The EGoM will meet again to decide whether there would be a minimum floor price or a price band for the IPP.

Tamil Nadu Chief Minister J Jayalalithaa had written to Prime Minister Manmohan Singh last month saying that the state would buy the 5% of Centre's equity that is being divested. The letter was sent to Sebi for their comments.

Senior officials from department of disinvestment (DoD), Coal Ministry and Principal Secretary (Finance) of Tamil Nadu state government had last week discussed the modalities for offloading stake in NLC.

The stake sale is being proposed to meet the minimum public holding norms. SEBI has set a deadline of August 8, 2013, for all listed central public sector units to have a minimum 10% public shareholding.

The Cabinet had last month cleared sale of 5% of government's stake, through an offer for sale in NLC.