Tata Steel may offer 10% of existing capital for future float

Steel giant Tata Steel is likely to offer 10 per cent of its existing paid-up capital in case of future overseas or domestic offerings. The company's paid-up equity comprises 55.34 crore shares.

The steel major has convened an extraordinary general meeting on March 24 to seek shareholders' nod for raising Rs 5,000 crore from the market in tranches.

Incidentally, the management has already indicated that it is considering to float either an American depositary share or a global depository receipt.

According to the communiqué send to shareholders, the company has made it clear that the future issue will be structured such a manner that it does not exceed 10 per cent of its existing paid-up capital. It has also mentioned that the company might again take shareholders' approval for raising the authorised capital, if needed.

"While no specific instrument has been identified at this stage for equity offering, in the event the company issues any equity-related instruments, the issue will be structured in a manner that the additional shares would not exceed 10 per cent of the existing paid-up capital," the communiqué said.

According to market experts, the company is likely to offer around 5 crore share in case of overseas offerings. The scrip is now hovering at around Rs 420-422 after touching a high of Rs 430-435.

"The market is bullish about Tata Steel for the last couple of months. If the scrip continues to remain at a level higher than Rs 400 then the equity issue alone could fetch more than Rs 2,000 crore going by the self imposed cap of 10 per cent of the management," said a leading NSE broker.

Tata group currently holds around 26.55 per cent in Tata Steel, through Tata Sons and Tata Motors. LIC is the second biggest shareholder with 12.09 per cent. FIIs hold around 13.88 per cent.

Experts, however, feel that in case of a 5 crore equity issue too, the promoters stake may not be diluted as the resolution pertaining to the allotment has not ruled out a portion of the issue to existing shareholders.