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The government today said market regulator Sebi has given its consent to Tamil Nadu government's proposal to buy Centre's 5% stake in Neyveli Lignite Corp (NLC) provided the acquisition is done by a qualified state entity.
"SEBI is of the view that the proposal could get covered within the guidelines on IPP. However, the exact details needs to be worked-out that require discussions with the officials of the Government of Tamil Nadu, Ministry of Coal and Department of Disinvestment," an official statement said.
The Department of Disinvestment (DoD) had sought Sebi's views on Tamil Nadu Government's proposal to buy 5% of Centre's stake in NLC disinvestment.
Sebi has written back to disinvestment department last week saying that the 5% stake sale should be done to the state PSUs through the Institutional Placement Programme (IPP) route. Also, the acquirer has to be registered with SEBI 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 Qualified Institutional Buyers including state undertakings of Tamil Nadu," the statement added.
Tamil Nadu Chief Minister J Jayalalithaa had written to Prime Minister Manmohan Singh last month saying that the state would buy the 5% of Centre's equity that is being divested. The letter was sent to Sebi for their comments.
"Ministry of Finance has requested the Government of Tamil Nadu to nominate senior official for further discussions with SEBI with regard to its proposal," the statement added.
Sebi, sources said, has now asked the Tamil Nadu government to send a concrete proposal and the list of state PSUs which could buy shares in NLC.
The Centre currently holds 93.56% stake in NLC. The stake sale is being proposed done to meet the minimum public holding norm. SEBI has set a deadline of August 8, 2013, for all listed central public sector units to have a minimum 10% public shareholding.
The Cabinet had last month cleared sale of 7.8 crore shares, or 5% of government's stake, through an offer for sale in NLC to raise Rs 455 crore at current prices.
Shares of NLC on Friday closed at Rs 58.30 on the BSE.
Finance Minister P Chidambaram had last week said the Centre will consider Tamil Nadu government's offer to buy 5% stake in the proposed disinvestment of NLC and sought to assuage employees' concerns, saying there will be no change in management or staff policies.
The Tamil-Nadu headquartered firm is facing stiff protests over the disinvestment decision and 30,000 workers went on an indefinite strike since July 3 to protest the disinvestment.
