A 5% discount may be given to retail investors and employees of Steel Authority of India (SAIL) when the company comes out with its follow-on public offer (FPO). SAIL FPO follows the public issues made by three navratna companies Rural Electrification Corporation, NMDC and NTPC, which got poor responses despite similar offers.
?We can offer 5% discount to retail investors and SAIL?s employees in the follow-on public offer,? steel secretary Atul Chaturvedi said on Monday. The government had last week approved sale of 20% stake in SAIL to garner Rs 16,000 crore in two phases.
Both the phases may see SAIL and the government selling 5% equity each. ?The timing of the FPO would soon be decided. Depending on the market condition, we can also tweak the composition of the FPO. Government could sell its 10% in one go while the company may raise equity in two phases,? Chaturvedi said.
The government at present holds a little over 85% stake in SAIL. After the FPO, the government equity will fall to 69%, while the public holding will increase from 14.2% to 31%.
The issue proceeds will be used to part finance SAIL?s Rs 70,000-crore expansion programme to take the annual production capacity to about 23 million tonnes from the current 14 million tonnes. The company is also planning to buy coking coal properties abroad through a special purpose vehicle?International Coal Ventures Ltd?to feed the expanded capacity.
The government on the other hand aims at financing part of its massive infrastructure and social sector programmes from the proceeds. The finance ministry has already targeted to raise Rs 40,000 crore through disinvestment in different PSUs, including SAIL, Engineers India, Hindustan Copper and Coal India during the current fiscal.