New Delhi: The much awaited Rs8,000 crore follow-on public offer (FPO) of state-run Steel Authority of India (SAIL) is likely to hit the capital markets by around 14 June, while the steelmaker would file the prospectus for the issue by the end of this month.
“Red Herring Prospectus (RHP) is expected to be filed by the end of this month, while the FPO would hit the market around June 14. However, the exact dates will be finalized by the board in its meeting on May 23,” SAIL spokesperson R. K. Singhal told PTI.
SAIL chairman C. S. Verma last month had said that the FPO would hit the markets in early June.
The FPO of SAIL, in which the government holds a little over 85% stake, has failed to meet deadlines repeatedly since December last year due to unfavourable market conditions and problems with merchant bankers.
According to the Bombay Stock Exchange (BSE) data, the shares of SAIL have declined by about 19% since January and on Monday it closed at Rs152.25 apiece on BSE.
SAIL is also expecting that its RHP would be cleared by the market regulator Sebi (Securities and Exchange Board of India) on a fast track basis as it fulfills the criteria of having continuous profits in last three years and a turnover or market capitalization of over Rs50,000 crore.
However, delay in SAIL’s FPO thwarted the achievement of the government’s divestment target for the previous fiscal and it could only raise over Rs22,000 crore against the target of mopping up Rs40,000 crore through stake sale in state-owned firms.
The government plans to go for disinvestment in SAIL in two phases. In the first phase, it plans to raise Rs4,000 crore by divesting 5% government stake, while the company will raise fresh equity of the same proportion.
In the second phase that is yet to be announced, another 10% stake sale would be undertaken by SAIL through the FPO route. Post-FPO, government’s equity in the company is expected to go down to about 69%.