The Hindu Business Line : NMDC divestment: Govt seeks EoI from merchant, investment bankers

THE Government is going ahead with disinvestment in the National Mineral Development Corporation (NMDC) and has sought Expression of Interest (EoI) from merchant and investment bankers to act as book runners-cum-lead managers for disinvesting a minority stake in the company.

The Government holds 98.38 per cent equity in the company. It plans to divest equity shares to the extent of 15 per cent through the book building process in the domestic market. The balance is with the employees, institutions and the public. The paid-up capital of the company as on March 31 last year was Rs 132.16 crore.

NMDC is engaged in exploration of a wide range of minerals including iron ore, limestone and diamonds and is the single largest iron ore producer. It is currently operating in three large mechanised iron ore mines in addition to operating the only mechanised diamond mine in the country.

The merchant and investment bankers can act either singly or as a consortium and can submit their EoI till February 15. The Government would select two parties who would work as a team. The parties selected will also have to form a syndicate including co-managers in consultation with the Government.

The managers would not only be required to advise the Government on the timing and modalities of the capital market offer, but also advise and assist in identification and selection of legal advisors, accountants, other intermediaries and coordinate their work under the guidance of the Government, complete due diligence, draft offering documents and red herring prospectus for the issue. It has been stipulated that the bidders should have handled domestic equity issues in respect of issues size of more than Rs 100 crore in book building process.

NMDC was incorporated in 1958 as a fully owned public Government enterprise. NMDC, which is under the administrative control of the Ministry of Steel and Mines, has been a consistently profit making and dividend paying company and reported a profit before tax of Rs 1,190 crore for the year ended March 31, 2005.