Morgan will lead manage NMDC FPO

New Delhi: The National Mineral Development Corporation (NMDC), India’s largest iron-ore producer and marketer, will be the first to hit the market under the government’s ambitious disinvestment programme, with Morgan Stanley emerging lead manager for the listed company’s imminent follow-on public offer. Divesting 8.38% of the government’s stake in NMDC would enrich the exchequer by Rs 14,000 crore, going by NDMC’s current market price.

The investment banker, along with five other merchant banks, will launch global roadshows to market the issue in a couple of weeks, official sources said. The government is keen to realise the sale proceeds before the end of the current fiscal. Analysts say the NMDC stake sale could prove the single-largest issue by value among the current lot of PSUs earmarked for disinvestment.

The Hyderabad-based company, which has an exposure to diamond mining and is planning joint venture steel units with SAIL and RINL, has estimated cash reserves of around Rs 12,000 crore. When contacted, a company executive said it has lined up a Rs 26,000-crore expansion plan.

ICICI Securities, Kotak Mahindra and SBI Caps are among the other firms short-listed by the government as merchant bankers. According to sources, the government might consider the auction method for stake sale to institutional investors.

The Cabinet Committee on Economic Affairs earlier this month approved sale of an additional 8.38% government stake NMDC. Currently, the government holds about 98.38%, while the public holds the balance.

NMDC shares closed at Rs 414 on the BSE on Friday. After the stake sale, 10% of NMDC’s total equity will be with the public. The Centre had earlier announced it would list all its profit-making companies and maintain a minimum public float of 10%.

Morgan Stanley is a global leader in raising funds for metal and mining companies. It arranged funds worth $3 billion for Sterlite and Sesa Goa in the current year. A total of 17 investment banks made presentations to the government on Tuesday and Wednesday to advise it on the NMDC FPO.

These included ICICI Securities, Citigroup, Morgan Stanley, Deutsche Bank, Nomura Financial, IDBI Capital, Edelweiss Capital, Axis Bank, Karvy Investors, RBS Equities, SBI Capital, JM Financial, Kotak Mahindra, IDFC-SSKI, Enam Securities, DSP Merrill Lynch and UBS Securities.