Govt to sell up to 25% stake in National Seeds Corp; seeks advisors for IPO

Govt is also looking to appoint up to two merchant bankers who would have handled OFS of at least Rs 1,000 crore, and an IPO of Rs 500 crore in the past three years

The government will sell up to 25 per cent stake in National Seeds Corporation (NSC) through an initial public offering (IPO), and has invited bids from advisors to assist it in the process.

The public sector company comes under the administrative control of the Ministry of Agriculture and Farmers Welfare, and produces certified seeds of nearly 600 varieties of 60 crops. The company’s net worth, as on March 31, 2020, was Rs 646 crore.

The Department of Investment and Public Asset Management (DIPAM) has invited bids from legal advisors and merchant bankers to assist in the transaction. Intermediaries will have to submit their bids by September 1.

Domestic law firms are required to submit their proposals in consortium with a reputed international law firm that has similar experience and expertise in public offerings. Foreign law firm, in the consortium, need to have prior experience in managing Indian capital market transactions.

The legal advisor will have to prepare the Draft Red Herring Prospectus (DRHP), Red Herring Prospectus (RHP), and the final Prospectus for filing with the Securities and Exchange Board of India (Sebi) and exchanges. It will also be required to draft responses to queries received from SEBI, exchanges and depositories, along with processing applications with other regulators such as the Reserve Bank of India (RBI).  

The international legal adviser will have to advice on international publicity related restrictions, draft international marketing documents, internet restrictions, among others. It will also have to draft comfort letters, and advise underwriters on Participatory Note (P-Note) related matters.

The government is also looking to appoint up to two merchant bankers with experience in public offerings who will work in a team. These merchant bankers should have handled offer for sale transactions of at least Rs 1,000 crore, and an IPO of Rs 500 crore between July 1, 2018 and June 31, 2021.

Each of the selected bankers will have to submit a detailed strategy for reaching out to the retail investors for creating awareness about retail participation in the NSC IPO at least 14 days prior to filing of RHP.

BRLMs will be required to structure the IPO in conformity with the prevailing framework and regulations of Sebi. They will also have to undertake due diligence process and prepare the DRHP. BRLMs will also assist the government in securing approval and exemptions, wherever necessary, from regulatory agencies like Sebi, RBI as well as the stock exchanges. Their responsibility will also include undertaking market research, assist in the pricing of the issue, allocation of shares, and provide after sale support, among others.

As on March 31, 2021, NSC employed 1,312 regular workers. The company’s paid up capital, as on March 2021, was Rs 57 crore comprising of 573,000 shares with face value of Rs 1,000 a share. It reported a Rs 30 crore profit after tax for financial year 2019-20.

FY20 PAT (in Rs Crore)	30
FY20 Net Worth (in Rs Crore)	646
FY21 Paid-Up Capital (in Rs Crore)	57
Employees	1312