HSBC, UBS, ICICI, SBI in race to manage Engineers India FPO

HSBC Holdings, UBS AG, ICICI Securities and SBI Capital Markets are among the 11 banks in fray to manage public offering of state-run consultancy firm Engineers India Ltd (EIL).

Kotak Mahindra Capital, Enam Securities and IDBI Capital Market Services are also in race to manage sale of government's 10 per cent shareholding through a further or follow-on public offering (FPO), likely in June or July, an official said here.

"The interested companies have been called for beauty prade (presentations) tomorrow and the day after," he said. "Four issue managers will be selected after presentations." Others in fray are IDFC Capital, Avendus Capital, Edelweiss Capital and Centrum Broking.

At the current market price, the government is expected to raise about Rs 1,000 crore through sale of its 10 per cent stake in EIL, which provides design and engineering services for petroleum, power and fertiliser companies.

As a prelude to the divestment, EIL paid a 1,000 per cent (Rs 100 per share) special dividend totalling Rs 561.65 crore. Of this, the government, which holds 90.4 per cent equity, got Rs 507.65 crore plus a dividend tax of over Rs 96 crore.

He said the company will now issue two bonus shares for every one held and subsequently split the Rs 10 share into two of Rs 5 each. The process would be completed by the May-end.

Thereafter, the company will finalise audited accounts for 2009-10 fiscal before filing draft red herring prospectus for the follow-on public offering.

EIL, which had a cash reserve of Rs 1,320 crore as on March 31, 2009, has till date given Rs 600 crore in dividends to the government on a Rs 25 lakh share capital that formed the company in 1965.

EIL had reported a 67 per cent jump in net profit to Rs 310.65 crore in April-December period of the 2009-10 fiscal. Turnover had risen 20 per cent to Rs 1,353.46 crore. Shares of Engineers India today closed 2.95 per cent lower at Rs 452.15 on the Bombay stock Exchange.