Six merchant bankers including SBI Caps, Citi Group and ICICI Securities are in the fray to manage the Centre’s 29.535% residual stake sale in Hindustan Zinc Ltd (HZL) in the open market tranches.
Other bankers, who will make presentations via videoconferencing to the department of investment and public asset management (Dipam) before the opening of their financial bids on Friday, are –HDFC Bank, IIFL Securities and Axis Capital, according to official notification.
The government intends to appoint up to five merchant bankers for two years to help the government sell HZL stakes in tranches. The selected merchant bankers would assist with the timing of the disinvestment, get investor feedback, and hold roadshows as well as help in securing regulatory approvals.
At current market prices, the Centre’s stake is worth about Rs 34,000 crore.
With the privatisation of BPCL now on the back burner, the sale of the HZL is one of the few big-ticket stake sales the government will rely on in this fiscal year to boost its non-debt capital receipts.
As per the Supreme Court order dated November 18, 2021, the Centre can sell its residual stake in HZL in the open market under the Sebi rules. Recently, the Centre and Vedanta, the promoter of HZL, have mutually decided to end an arbitration concerning the second call option demanded by Vedanta in the residual stake sale.
In 2002, Vedanta (earlier known as Sesa Sterlite) bought a 26% stake in HZL, India’s largest zinc/lead miner. It exercised the first call option in 2003 and acquired an 18.9% additional stake in HZL. Vedanta later acquired another 20% stake in the company through an open offer, increasing its shareholding to 64.92%.
To acquire the government’s remaining 29.5% share in HZL, it exercised the second call option in 2009, but this was rejected by the government. Following this, Vedanta initiated arbitration proceedings against the government in the same year.