Govt seeks advisers for MUL selloff

The government has invited expressions of interest (EoIs) from merchant bankers and investment bankers to act as advisers to the proposed sale of 8 per cent government equity in Maruti Udyog Ltd to public sector banks and financial institutions.

It proposes to appoint two advisers with expertise in disinvestment through capital market offerings. Interested parties will be required to submit their EoIs before October 3, either, singly or as a consortium.

The government is also planning to exit from the remaining 10.28 per cent stake in MUL. According to the revised joint venture agreement between MUL and Suzuki Motor Company, the government will not be able to appoint its nominee to the Maruti board after July 2006, even if it continues to hold a 10.28 per cent stake in the company.

"There is no economic rationale in the government holding the remaining stake after July 2006," officials in the department of disinvestment said. The government might also decide to go to the public while offloading the remaining 10.28 per cent stake, they added.

The advisers were expected to work on the timings and the modalities of the sale process, including pricing and allocation of shares, to ensure best returns to the government.

The government was also looking at various models of structuring the sale transaction, which would be decided in consultation with the advisers, officials told Business Standard.

These models will be in line with Sebi guidelines. The eligibility criteria require bidders to have handled domestic equity issues of more than Rs 100 crore.

The fee quoted by the lowest bidder would be shared equally between the two advisers appointed by the government. The shortlisted parties would have to make a presentation before an inter-ministerial group constituted by the government.

The final decision on the appointment of bidders would be taken by the core committee on disinvestment headed by the cabinet secretary, officials said.

The Government of India holds 18.28 per cent equity of the company, Suzuki Motor Corporation holds 54.21 per cent and the FIIs, Indian Financial Institutions and the public hold the balance.

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Setting the ball

Interested parties asked to submit EoIs by October 3, either singly or as a consortium

Bidders should have handled domestic equity issues of more than Rs 100 crore

Advisers to work on the modalities of the sale process, including pricing and allocation of shares, to ensure best returns