SAIL disinvestment next in line; 20% FPO on cards

SAIL disinvestment next in line; 20% FPO on cards

New Delhi: Disinvestment in steel giant SAIL seems to be the next in stake sale in PSUs, with the government considering a two-phase follow-on-public offer of the navratna firm, which will fetch the Centre over Rs8,000 crore at current share prices.

“The 20% FPO will be a combination of 5% dilution of government’s equity and 5% issue of additional shares in each phase," a senior steel ministry official said.

“Steel minister Virbhadra Singh has already approved the proposal, which has also got in-principle approval of the disinvestment department of the finance ministry. Now, SAIL is finalising the document which will be presented in its board meeting this week," the official said adding: “SAIL will then inform Sebi about the move and after that the ministry will prepare a note to be sent to the Cabinet for its approval, likely by December."

Going by the current market value of SAIL, offloading 10% will fetch over Rs8,000 crore. Since the FPO is mix of governments stake and issue of fresh equity by the company, the share of the Centre and firm will be Rs4,000 crore each.

“The first tranche of 10% may happen this fiscal, while the next is likely in 2010-11," another official said.

The issue would bring the government’s holding down to about 68% from over 85% now.

When contacted, SAIL officials did not comment. Its share prices closed over 4% up at Rs194.74 on BSE from its previous close.