SAIL FPO: Panel to be formed to select bankers

The government may soon form a high-level committee to take forward the estimated Rs 16,000 crore share sale of the steel PSU.

"A committee, comprising officials from the Steel Ministry, Department of Disinvestment under the Ministry of Finance and SAIL, will soon be formed. It is likely to be chaired by Steel Secretary Atul Chaturvedi.

"The committee will select Book Runners-cum-Lead Managers (BRLMs) for SAIL's follow-on public offer by next month," sources told PTI. The committee is expected to seek bids from investment bankers to manage the FPO.

The BRLMs are generally entasked to prepare the schedule of the FPO, file draft papers with the market regulator and advice the government on fixing the price and mode of the offering, besides conducting the share sale.

Industry observers say that if the BRLMs are selected by the next month, SAIL could file a draft red herring prospectus with market regulator SEBI by June for an FPO later this year.

The two-phase 20 per cent share sale programme, which was approved by the Cabinet last Thursday, may generate a total of Rs 16,000 crore as proceeds. However, the final proceeds would depend on the issue price of the FPO, to be decided by an Empowered Group of Ministers.

Both the phases of the FPO may see SAIL and government selling five per cent equity each, with 10 per cent sold in the current fiscal and the remaining during the next fiscal.

The government at present holds a little over 85 per cent participating interest in SAIL and post-FPO, its equity in the company is expected to go down to about 69 per cent.

SAIL is looking to use the proceeds from the FPO to part fund its Rs 70,000 crore expansion programme to ramp up production capacity to about 23 million tonnes from the current 14 million tonnes.

The government on the other hand aims to partly finance its massive infrastructure and social sector programmes from the proceeds of the FPO. The Ministry of Finance expects to raise Rs 40,000 crore through disinvestment in different PSUs, including SAIL, Hindustan Copper and Coal India, during the current fiscal.

SAIL's counter on the Bombay Stock Exchange on Tuesday finished at 229.55, 2.71 per cent lower than the previous close.