Disinvestment in the Steel Authority of India (SAIL) seems to be on the cards, with the government considering a two-phase, follow-on-public offer (FPO) of the Navratna. This will fetch the Centre over Rs 8,000 crore at current share prices.
The 20 per cent FPO will be a combination of 5 per cent dilution of government’s equity and 5 per cent issue of additional shares in each phase, a senior steel ministry official said. “Steel minister Virbhadra Singh has already approved the proposal, which has also got in-principle approval of the disinvestment department of the finance ministry. Now, SAIL is finalising the document, which will be presented in its board meeting this week,” the official said.
He added: “SAIL will then inform Sebi about the move and after that the ministry will prepare a note to be sent to the Cabinet for its approval, likely by December”.
Going by the current market value of SAIL, offloading 10 per cent will fetch over Rs 8,000 crore. Since the FPO is a mix of government stake and issue of fresh equity by the company, the share of the Centre and company will be Rs 4,000 crore each.
The first tranche of 10 per cent may happen this year, while the next is likely in 2010-11, another official said.
The issue would bring the government’s holding down to about 68 per cent from over 85 per cent now. SAIL officials did not comment.
