Business Today

SAIL shortlists JP Morgan, Deutsche, others for FPO

The state-owned company said the bankers will manage the first phase of its upcoming Rs 8,000-crore follow-on public offer, scheduled for early next year.

twitter-logo PTI   New Delhi     Last Updated: September 15, 2010  | 15:04 IST

State-owned Steel Authority of India Ltd (SAIL) on Wednesday said six bankers, including JP Morgan and Deutsche Bank, have been shortlisted for managing the first phase of its upcoming Rs 8,000-crore follow-on public offer (FPO).

"We have shortlisted six banks for our FPO and have made an offer. Now, they have to accept it," SAIL Chairman C S Verma said.

SBI Capital, Enam Securities, Kotak Mahindra Capital and HSBC have also been shortlisted for managing the FPO, slated to hit the market early next year, he added.

Verma added that SAIL had not sought the Law Ministry's opinion on the procedure, as "there was no legal question involved" in the appointment of book runners and lead managers for the share sale.

Recent media reports suggested bankers vying for the FPO had all offered to charge one-tenth of a paisa as their fee, which prompted SAIL to seek the Law Ministry's opinion on how to select the best candidate from the 17 firms that had bid to manage the FPO.

The announcement comes after SAIL had earlier this month said it will appoint up to six merchant bankers to advise it on the timing of the first tranche of its share sale.

The banks will manage the first phase of its 20 per cent share sale programme, 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 a 5 per cent stake.

Another 10 per cent 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 Rs 16,000 crore.

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

SAIL wants to part-fund its Rs 70,000-crore expansion programme with the proceeds from the share sale, while for the government, the stake dilution will help attain its disinvestment target of Rs 40,000 crore for this financial year.

Shares of the company were trading at Rs 200.10 on the Bombay Stock Exchange on Wednesday, up 0.08 per cent from the previous close.

  • Print

A    A   A