'SAIL FPO in Feb, bankers question in Steel Min's court'

The Steel Authority of India's (SAIL) much-awaited follow-on public offer (FPO) will come out next month and the Steel Ministry will examine the question of the same four merchant bankers, who are running rival Tata Steel's offer as well, handling the offer, said a Finance Ministry official today.

"SAIL FPO would come out in this fiscal, sometime in February. The Steel Ministry is examining the issue of merchant bankers and they would come out with some conclusion in next 2 to 3 days," a Finance Ministry official told PTI.

Recently, the government had questioned business ethics of four leading investment banks--SBI Caps, Kotak Mahindra, Deutsche Bank and HSBC--for accepting the job of managing the public offer of Tata Steel when they were already working on SAIL's FPO.

These bankers were hired as the book running lead managers (BRLMs) for SAIL's FPO in September last year, much before Tata Steel reached an agreement with them to manage its over Rs 3,000 crore FPO that closed today.

"We are unhappy about it. I don't know if they (banks) can do like this. Certainly, this is unethical...,"the then Steel Minister Virbhadra Singh had said earlier this week.

The government plans to disinvest SAIL in two phases. In the first phase, besides raising Rs 4,000 crore by divesting 5 per cent government stake, the steel giant would raise fresh equity of the same proportion.

In the second phase that is yet to announced, another 10 per cent stake sale would be undertaken by SAIL through the FPO route.

Presently, the government holds a stake of a little over 85 per cent in SAIL. Post-FPO, its equity in the company is expected to go down to about 69 per cent.

Aiming to raise Rs 40,000 crore through disinvestment in the current fiscal, the government has mopped up over Rs 22,000 crore by diluting its stake in six companies-Satluj Jal Vidyut Nigam, Engineers India, Coal India, Power Grid, Manganese Ore India and Shipping Corporation of India.

Besides SAIL, the government also plans to dilute its stake in ONGC in March this fiscal.

The Cabinet, on December 1, had approved sale of the government's 5 per cent stake in ONGC, which is the nation's highest profit-earning firm, to raise up to Rs 13,000 crore.

Post offer, the government shareholding in ONGC would come down to 69.14 per cent from the current 74.14 per cent.