SAIL FPO may be advanced due to buoyant markets
Enthused by buoyant market conditions, the government said it may advance Steel Authority of India Ltd’s share sale and launch the FPO by December 2010 instead of earlier planned January to February next year and is expected to raise INR 8,000 crore in the first phase.
Mr PK Misra steel secretary said that “Market conditions are buoyant. If it remains like this, we may consider advancing SAIL FPO in the calendar year 2010.”
State owned SAIL has already shortlisted six bankers, including JP Morgan and Deutsche Bank, for managing the first phase of its upcoming FPO. SBI Capital, Enam Securities, Kotak Mahindra Capital and HSBC are the other bankers for the FPO which was slated to hit the market in January February 2011.
The banks will manage the first phase of its 20% share sale program under which the government plans to divest 5 per cent of its stake in the company, while the steel giant will issue additional shares equivalent to 5% stake.
Another 10% stake will be sold under the second phase of the FPO, the timing of which will be decided later. The two-phase FPO may help raise a total of INR 16,000 crore.
At present, the government holds a little over 85% stake in SAIL and post FPO, its equity in the company is expected to go down to about 69%.
SAIL wants to part-fund its INR 70,000 crore expansion program with the proceeds from the share sale, while for the government, the stake dilution will help attain its disinvestment target of INR 40,000 crore for this fiscal.