New Delhi: The government on Wednesday said that state-owned MOIL, which will hit the capital markets on 26 November, would become the first PSU to come with a public offer where retail investors can invest up to Rs2 lakh.
“This would be the first issue by a PSU (MOIL issue ) where retail investors will be able to invest up to Rs2 lakh,” disinvestment secretary Sumit Bose told reporters here.
As per the new norms announced by the market regulator Sebi in October, investment limit for retail investors in initial share sale offer has been doubled to Rs2 lakh as against Rs1lakh earlier.
MOIL, formerly known as Manganese Ore (India) Ltd, will hit the capital market on 26 November with a public issue of 3.36 crore equity shares and the IPO would close on 1 December.
The government has fixed the price band at Rs340-375 a share for the issue, which is expected to raise up to Rs1,238 crore through the share sale programme.
The issue has been priced, taking into account number of factors including strength of the company, its management and assessment of its peer firms, Bose said.
On roping in anchor investors, he said, “We are not going for anchor investors in this issue. There is adequate demand by FIIs.”
The IPO will have the Centre divest 10% of its stake in the country’s largest manganese manufacturer, while Madhya Pradesh and Maharashtra governments will shed five per cent each.
The issue would raise a total of Rs1,238 crore at the upper end of the price band, including 5% discount to retail investors and MOIL employees.
Steel secretary Pradeep Kumar Misra said that the largest domestic producer of manganese ore was likely to be listed on domestic bourses by 13 December.
“Tentative date for listing will be 10-12 days after the issue closes,” Misra said, adding, “Market for MOIL is fairly assured.”
“Market should take this issue enthusiastically. We also welcome retail investors. The basic objective of the government of India in disinvesting in PSUs is larger holding of public,” he said.
MOIL has a total employee strength of 6,734 and its about 3,000 employees have already opened demat accounts.
For the half year ended 30 September, the company’s turnover was Rs635 crore, as compared to Rs430 crore in the first half of previous fiscal. Profit after tax for the first half of this year stood at Rs330 crore against Rs201 crore in the year-ago period.
MOIL chairman K. J. Singh said the company was looking for diversification and expansion.
He said the company will ramp up its production capacity within the country to 1.5 million tonnes from the existing 1.1 million tonnes by 2015 at an investment of Rs768 crore.
It is also looking at acquisitions in South Africa and Congo to meet growing domestic demand for manganese ore, which is pegged to touch 4.5 million tonnes in 2012 if the target for enhancing steel production capacity to 120 MT is met.
The company has cash reserves of Rs1,700 crore and there is no dearth of money for acquisitions, he said.
MOIL will be the first PSU to launch an IPO where retail investors can invest up to Rs2 lakh.
RPP Infra Projects, a firm engaged in infrastructure development, was the first corporate to relax the subscription limit for retail investors to Rs2 lakh for its 4-day initial public offer that opened on 18 November.
The subscription limit for retail investors in public stake sales was last raised from Rs50,000 to Rs1,00,000 way back in in 2005.
The government, which hopes to raise Rs40,000 crore through its disinvestment programme this fiscal, has already mopped up close to Rs20,000 crore through divestment in PSUs Satluj Jal Vidyut Nigam, Engineers India, Coal India and Power Grid.
After MOIL, the follow-on public offer of state-owned Shipping Corporation is next in line. SCI’s public offer will open on 30 November and close on 3 December. This would be followed by Hindustan Copper’s FPO in the first week of December.
The government is likely to dilute its stake in Indian Oil Corporation, ONGC and SAIL in the last quarter of the current fiscal.
In 2009-10, the government had raised Rs25,000 crore through divestment of its stake in Oil India, NMDC, REC and NTPC.