The government today approved selling its 10 per cent stake in navratna company Shipping Corporation of India (SCI) and allowed it to raise 10 per cent fresh equity, paving the way for Rs 1,300 crore public issue that is likely to hit markets by December.
The proceeds from fresh equity sale will enable the company, which has cash reserve of Rs 2,500 crore, to partly fund its expansion programmes, including fleet acquisition.
"The Cabinet Committee on Economic Affairs today gave its approval for issue of fresh equity of 10 per cent by SCI of its existing equity...Sale of 10 per cent of the existing equity out of the government shareholding," an official statement said.
It further said that the disinvestment in SCI is expected to fetch nearly Rs 1,300 crore.
Sources in the shipping ministry said: "The follow-on public offer (FPO) may hit the market some time in December as the market conditions are favourable." They added that company board will take a final call on the dates some time later this month.
According to the decision taken by the Cabinet Committee on Economic Affairs, retail investors and employees of the largest domestic shipping liner would get 5 per cent discount on the issue price in the FPO, while the employees will also get a quota of 0.5 per cent of share sale.
The government, which currently holds an 80.12 per cent stake in the Navratna PSU, will sell 4.23 crore of shares and the company will issue as many shares.
"This disinvestment will develop a roadmap for higher people ownership of this company, while ensuring that the government equity does not fall below 51 per cent," the statement added.
SBI Caps, IDFC Capital and ICICI Securities have been appointed as the Book Running Lead Managers for the issue in August.
In this year's budget, Finance Minister Pranab Mukherjee had announced that Rs 40,000 crore will be raised through the sale of shares of public sector companies.
So far, divestments in Satluj Jal Vidyut Nigam and Engineers India have fetched over Rs 2,000 crore for the government, while big ticket IPO of Coal India, which is expected to fetch between Rs 12,000-16,000 crore for the government, will hit the market on October 18.
This will be followed by FPOs and IPOs of SAIL, ONGC, Indian Oil, MMTC, Manganese Ore, Hindustan Copper among others in the coming months.
SCI, whose shares closed at Rs 168, up 0.45 per cent on BSE today, has a fleet of 75 ships of 5.10 million DWT (Dead Weight Tonnage) and plans to double its capacity to 10-million DWT by 2015.
