The Government is in the process of redrafting the proposal document format for appointment of merchant bankers to avoid the conflict of interest between public and private share sale issues.

“There was an issue in SAIL... That part (appointment of merchant bankers) of the document was drafted way back in 2001, we are trying to update that,” the Disinvestment Secretary, Mr Sumit Bose, told reporters here today.

To avoid the conflict of interest of investment bankers (I-bankers) handing the public issue of both state-run and private companies at the same time, the Disinvestment Department would tweak the format of Request for Proposal (RFP) for appointing the lead managers to the issue.

The follow-on public offer (FPO) of SAIL was delayed last year after the four book running lead managers (BRLMs) managing the issue accepted the job of managing the public share sale of private firm Tata Steel.

“We are taking into account what the legal opinion is to make sure that everyone knows where they stand, the BRLMs should understand what we are looking for,” Mr Bose said.

SBI Caps, Kotak Mahindra, Deutsche Bank and HSBC were hired as the book running lead managers for SAIL’s FPO in September 2010, much before Tata Steel reached an agreement with these banks to manage its over Rs 3,000-crore FPO.

Steel Authority of India Ltd’s (SAIL) Rs 8,000-crore FPO was initially slated to hit the market in February, but was later delayed. Mr Bose said the steel Navratna’s further public offering is most likely to come out in June.

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