Sebi agreeable to TN govt undertakings buying NLC stake

Now, state undertakings buy Centre's 5% stake in NLC, provided acquisition is done by a qualified state entity

A middle ground is being worked out to divest government stake in Neyveli Lignite Corporation (NLC) to both satisfy the minimum public shareholding norms of the equity markets regulator, Sebi, and pacify workers at the corporation. The latter have been on strike over the stake-sale decision of the Union cabinet last month.

Sebi (the Securities and Exchange Board of India) is agreeable, in principle, to the Tamil Nadu government’s proposal to let its state undertakings buy the five per cent stake sought to be divested, provided the acquisition is done by a qualified state entity. The Union finance ministry informed the state government today about this and asked it to nominate senior officials for further discussion with Sebi.

Chief Minister J Jayalalithaa had written to Prime Minister Manmohan Singh to resolve the issue. The Union had said the move was necessary due to the new Sebi rules, of at least 10 per cent of the shares in a listed central government entity being held by others. The Centre’s current holding is 93.56 per cent in the mining company.

The Union finance ministry today informed Tamil Nadu, “Sebi is of the view that the proposal could get covered within the guidelines on IPP (institutional placement programme). However, the exact details need  to be worked out, requiring discussion with the officials of the government of Tamil Nadu, ministry of coal and department of disinvestment.”

Sebi, sources said, had also asked the TN government to send a concrete proposal and the list of state undertakings which could buy shares in NLC.

The department of disinvestment had earlier sought Sebi’s views on the state government’s proposal. Sebi has written back on the stake sale being done to state undertakings through the IPP route and the latter also having be registered with it as a qualified institutional buyer (QIB).

“In the offer document for IPP, the seller can propose the criteria on the basis of which allocation could be made. This can be used to give preference to any set of QIBs, including state undertakings of Tamil Nadu,” the finance ministry stated.