Merchant banker issue may delay SAIL public offer

Debabrata Das New Delhi | Updated on February 02, 2011

SAIL Ltd's follow-on public offer (FPO) might be delayed further as the Steel Ministry is yet to decide on retaining its merchant bankers.

“As of now the target is to bring out the FPO by the third week of February. But this target might be missed if the merchant bankers are changed,” a Steel Ministry official told Business Line.

Four of SAIL's merchant bankers for the FPO also managed Tata Steel's FPO, which hit the market in January. The four merchant bankers are SBI Capital, Kotak Mahindra, Deutsche Bank and HSBC.

The former Steel Minister, Mr Virbhadra Singh, had called this “unethical” on the part of the merchant bankers. The Steel Minister had asked for an explanation from the bankers and the bankers have replied.

SAIL had also approached the Attorney General of India, Mr G.E. Vahanvati, for legal opinion, following which the SAIL Chairman, Mr C.S. Verma, told reporters that the FPO will come out this fiscal itself.

The Steel Ministry is yet to take a call on whether to continue with the same merchant bankers and is expected to make a decision in the next week. “We will begin the final stages of work on the FPO once a decision is made regarding the merchant bankers,” said the Ministry official.

SAIL is yet to file the draft red herring prospectus with SEBI.

The Ministry official admitted that the Government took too much time to appoint independent directors of SAIL, which was required before going ahead with the FPO.

“If the independent directors were appointed earlier we could have come out with the FPO in end-November. There would be a negative impact on the amount of money that will be raised now as compared to what could have been raised in November. The markets aren't doing too well now and SAIL's share price has already fallen by almost 15 per cent since November,” the official said.

A banker with Enam Securities said if the FPO had hit the market in November, more money would have been mopped up.


Published on February 02, 2011

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor

You May Also Like