The 20 per cent FPO will be a combination of five per cent dilution of government’s equity and five per cent issue of additional shares in each phase, a senior steel ministry official told PTI.
“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 that “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 mix of governments stake and issue of fresh equity by the company, the share of the Centre and firm will be Rs 4,000 crore each. The first tranche of 10 per cent may happen this fiscal, 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.
When contacted, SAIL officials did not comment. Its share prices closed over 4 per cent up at Rs 194.74 on BSE from its previous close.
The follow-on-public offer is issue of additional equity to investors. Sources said SAIL would use the money raised through FPO to part fund its Rs 70,000 crore expansion programme to take its annual production capacity to about 23 million tonnes by 2012. The amount raised by the government would go to National Investment Fund created mainly to finance social sector programmes.
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