Will it be a fortune Friday for SAIL?

SAIL CMD CS Verma

BEGINNING its disinvestment plan, the government will sell its five percent stake in steel major Steel Authority of India Ltd (SAIL) on Friday (December 5) to mop up about Rs.1,700 crore while giving retail investors 5 percent discount to bid price.

The SAIL offering would be the first...

public sector share sale under Narendra Modi-led NDA government after taking charge from the UPA government in May this year.

The government aims at collecting Rs.43,425 crore through selling shares in various state-owned firms during current fiscal.

The SAIL scrip ended 4.67 per cent lower at Rs.85.65 on the BSE on December 3, while the floor price for the offer-for-sale would be determined on Thursday.

The sale of five percent stake or about 20.65 crore shares of SAIL at the current market price of Rs.85.65 a share would fetch the exchequer over Rs.1,700 crore.

As much as 10 percent of the offered shares has been reserved for retail investors, who can buy shares worth up to Rs.2 lakh in the share sale. A minimum of 25 percent of the issue size would be reserved for mutual funds and insurance companies.

“Retail investors will be allocated shares at a discount of 5 percent to the bid price entered by them,” an NSE circular said, adding that the final allocation price may be below the floor price.

The Cabinet had in July, 2012, approved a 10.82 per cent stake sale in SAIL. Accordingly, the first tranche of disinvestment of 5.82 per cent was completed in March, 2013.

The government also plans to sell five percent stake sale in ONGC, 10 percent in Coal India and 11.36 percent in NHPC.

HSBC Securities, Deutsche Equities, J P Morgan India are among the six merchant bankers advising the SAIL stake sale.

The Maharatna PSU is India's largest steel producing company. With a turnover of Rs 49,350 crore, the company has five integrated steel plants, three special plants, and one subsidiary in different parts of the country.