Goldman Sachs, HSBC Capital Markets and Merrill Lynch have been appointed joint global co-ordinators to the Mahanagar Telephone Nigam Ltd (MTNL) global depository receipts-cum-initial public offering (GDR-cum-IPO). Barclays de Zoete Wedd (BZW), Morgan Stanley and the Robert Fleming-Jardine Fleming combine have bagged the mandate for the Gas Authority of India Ltd (GAIL) issue.
The Union government announced the appointment of the six investment banks yesterday.
The MTNL offering is expected to net some $700 million (over Rs 2,500 crore) and the GAIL issue about $750 million (Rs 2,700 crore). Management fees for both the issues together are expected to amount to $30 million (over Rs 100 crore).
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The decision to appoint three bookrunners for each of the flotations comes as a surprise to the investment banking community, which expected the issues to have two global coordinators each.
The beauty parades the elaborate process to select the coordinators to the issue saw 23 investment banks vying with one another for the mandates. The flotations have generated considerable interest in the banking community because they are expected to be the only two offerings this fiscal year.
The fee income of around two per cent of issue value has also kindled interest among the bankers.
The government had earlier decided not to allow any investment banker to handle both issues. The decision was prompted by the governments desire to spread the (issue) goodies around.
It was felt that several of the investment bankers had invested significant amount of money and time in the country and should be given a mandate to sustain their interest here, a source said.
Of the six investment banks which have been picked as bookrunners, the names of the Robert Fleming-Jardine Fleming combine and Morgan Stanley have surprised some in the finance industry.
This is largely because Jardine Fleming was one of the global coordinators of the $527 million (Rs 1,900 crore) Videsh Sanchar Nigam Ltd (VSNL) and it was widely believed that the bookrunners to that flotation would not win a mandate. Kleinwort Benson and Salomon Brothers, the other two coordinators of the VSNL issues, do not feature in the list for either the MTNL or the GAIL issues.
Goldman Sachs is also a surprise choice. The securities house has already been shortlisted for the proposed GDR offering of Indian Oil Corporation, which has been put off because of the burgeoning oil pool deficit and its adverse impact on the oil public sector units bottomline. CS First Boston is the joint global coordinator to the issue.
Morgan Stanley has come through even though it was seen as a dark horse. It was not expected to bag any of the mandates after the bad publicity it had received after mishandling the BPL Cellular Holdings American Depository Receipts (ADR) issue late last year.
However, sources admit, the US investment bank has a good track record in handling oil and gas issues in the world markets.