SAIL stake sale this month; more incentives for retail players

Disinvestment of the steel major is expected to fetch the govt over Rs 1,700 crore

The government is proposing to offload 5% stake in SAIL this month and provide more incentives to retail investors to increase their participation.

The disinvestment of steel major SAIL is expected to fetch the government over Rs 1,700 crore.

"We are completing the roadshows of SAIL. If all goes right, the OFS will happen this month, a source privy to the development said.

The Department of Disinvestment will also decide on a "case to case basis" offering up to 20% quota for retail investors in Offer For Sale (OFS) and also offer them higher discounts to the floor price.

The present retail investor quota in OFS is 10%, while 35% is reserved for them in the Follow on Public Offer (FPO).

According to sources, the government would also now announce the issue date two days prior to the OFS, while the floor price will be declared on the day prior to the issue.

The sale of 5% stake or about 20.65 crore shares of SAIL at the current market price of around Rs 83.20 a piece would fetch the exchequer over Rs 1,700 crore.

The Cabinet had in July 2012 approved a 10.82% stake sale in SAIL. Accordingly, the first tranche of disinvestment of 5.82% was completed in March 2013.

The Budget 2014-15 proposes to garner Rs 43,425 crore from PSU disinvestment, of which about 30% is expected to come in from 5% or Rs 18,000 crore stake sale in ONGC.

Besides a 10% stake sale in Coal India is also on the table which could fetch about Rs 23,000 crore and will make up for half of the disinvestment target.

Besides, the DoD is in the process of finalising a Cabinet note for a 11.36% stake sale in NHPC and 5% each in PFC and REC.

Under the OFS mechanism, at present a minimum of 25% of the shares offered are reserved for mutual funds and insurance companies.

The government has been using the OFS route for disinvestment of PSUs.

Market regulator Sebi had in January, 2013 permitted the promoters of top 100 companies to use the auction route or OFS route to dilute stake in listed companies. It also permitted OFS in those PSUs which were to meet the minimum 25% public holding norm.