Amidst widespread speculation, Steel Authority of India Ltd (SAIL) said it would be filing its red herring prospectus (RHP) soon and deciding on appointment of bankers to launch its follow-on public offer (FPO) by next month as scheduled.
It will have to first solve the controversy concerning the bankers it hired last September as book running lead managers (BRLMs) for the FPO. A fortnight earlier, it asked four of the six banking companies to explain how and why they’d also agreed to take the job of managing rival Tata Steel’s share sale during the same time SAIL was planning to hit the markets.
“We are deciding on the BRLMs soon. We did not issue them show-cause notices; we had only sent them a letter, asking for a reply. They have sent a reply but we are awaiting a final response from them, which we should be receiving in a day or two, after which we will take a call on whether to change them or not,” SAIL chairman C S Verma told Business Standard.
He also said that contrary to the rumours, the FPO launch would not be postponed. “We are taking a view of various factors and issues before taking a final call. There is no delay at all. We had to cancel not roadshows but a pre-marketing meeting with the investors due to other appointments. We are in constant touch with our investors,” Verma added.
In September last year SAIL had hired six bankers to manage its Rs 6,500 crore FPO. Four — SBI Caps, Kotak Mahindra, Deutsche Bank and HSBC — were issued strongly-worded letters on the alleged conflict of interest, as the same bankers took over Tata Steel’s account. However, JP Morgan and Enam Securities are not involved with Tata Steel’s FPO.
The decision to go ahead with the disinvestment of SAIL was approved last year by the Union cabinet. However, the process took some time to take off due to certain regulatory issues and the government’s insistence on an opportune moment to come into the market, to mop up as much equity as possible.
Presently, the government owns around 85 per cent stake in SAIL, estimated to come down to about 69 per cent post the FPO. The government is also interested in this issue, as disinvestment of SAIL would enable it to reach near to the Rs 40,000-crore target on this head in the financial budget of 2010-2011.
