New Delhi:State-run Rashtriya Ispat Nigam Ltd (RINL) has received market regulatorSecurities and Exchange Board of India’s (Sebi) approval to raise funds through an initial public offer (IPO).

The steel maker had filed its draft papers with Sebi for the proposed public offer in September. Sebi issued its final observations on the draft red-herring prospectus (DRHP) documents on 22 December, according to the latest update by the capital markets regulator. Issuance of observations on offer documents by Sebi is considered as a clearance to the issuer to go ahead with the share issues through routes like IPOs, FPOs (follow-on public offers) and rights issue. Under the proposed IPO, the government would offload 488,984,620 shares through an offer for sale, of which 35% will be reserved for retail investors and 50% for qualified institutional buyers.

A discount of up to five per cent on the offer price shall be offered to retail investors. According to the DRHP filed with Sebi, the government will sell 10% of its stake in the company and the entire proceeds through the issue would go the exchequer. The IPO of state-owned steel maker RINL is scheduled to hit the markets in the current fiscal (2014-15), and the cabinet has already given its approval for the stake sale.

The issue will be managed by UBS Securities India Pvt. Ltd and Deutsche Equities (India) Pvt. Ltd. Last week, officials had said that as RINL was still assessing damage caused by recent Cyclone Hudhud to its plant at Visakhapatnam, the government has decided to defer IPO.

“The new timeline for the IPO of RINL would be drawn up after the company ascertains the damage," an official had said. The 10% government stake sale through the IPO is now likely to take place sometime in the next financial year, the official added. Cyclone Hudhud hit Andhra Pradesh on 12 October, forcing RINL to stop production at its lone facility at Visakhapatnam due to failure of power supply. According to estimates, its impact on state-run steel maker RINL’s profitability was about 350 crore.