The imbroglio over Steel Authority of India’s (SAIL) appointment of merchant bankers to manage its much-awaited Rs 8,000-crore follow-on public offer (FPO), also referred to the Attorney General of India, has finally been resolved.
Senior government officials now say there had been no ‘conflict of interest’ concerning the four bankers in question. The Department of Disinvestment (DoD) has also given its green signal to the issue and asked SAIL to go ahead with its share sale, senior government officials told Business Standard.
A committee on the FPO has been set up by the government, with representatives from the ministry of steel, the DoD and SAIL. It would determine how to proceed, fix the dates for road shows and other promotional activities, after which the company is expected to file the final prospectus.
SAIL would not be filing a draft prospectus as it has been put on a fast-track category by the government, which is anxious to achieve its Rs 40,000-crore disinvestment target for the year ending March.
In September last year, SAIL had hired six bankers to manage its FPO, of which four — SBI Caps, Kotak Mahindra, Deutsche Bank and HSBC – were issued showcause notices. Conflict of interest was alleged since they’d also taken on the task of managing rival Tata Steel’s share sale, which closed on January 21, raising Rs 3,477 crore. JP Morgan and Enam Securities, the other two hired, were not involved with Tata Steel’s FPO.
Last week, SAIL chairman C S Verma had said the FPO would come into the market in this financial year only. It had planned to utilise the money raised for funding its capital expenditure. It has also announced projects to raise annual production capacity to 23.46 million tonnes, from 13.82 mt now.
The government, which holds slightly more than 85 per cent stake in SAIL, is to offload five per cent to raise an estimated Rs 4,000 crore. And, SAIL is to issue fresh equity to raise a similar amount. After this FPO, the government’s portion would come down to 69 per cent.
