Ministers’ panel okays 3.56% stake sale in NLC via IPP
18 July 2013 10:10 PM GMT
A panel of ministers, headed by Finance Minister P Chidambaram, on Wednesday cleared the disinvestment of 3.56 per cent stake in Neyveli Lignite Corporation (NLC) through an institutional placement programme (IPP) and the issue is likely in the first week of August. The Department of Disinvestment (DoD) has originally planned to divest 5 per cent of its stake in the Tamil Nadu-based mining company. The Cabinet had last month approved the same.
Since the IPP mode is allowed only to meet the pubic holding norm minimum 10 per cent, the department would now sell only 3.56 per cent or over 5.58 crore shares. ‘The EGoM approved 3.56 per cent disinvestment in Neyveli Lignite though IPP,’ Disinvestment Secretary Ravi Mathur told reporters after a meeting of the Empowered Group of Ministers (EGoM).
The DoD has written to Sebi seeking preference to Tamil Nadu state PSUs, he said, adding that the Department would now file the offer document with Sebi and after that the issue would hit the market. Sources, however, said that the issue is likely only in the first week of August.
The Union Government holds 93.56 per cent stake in Neyveli Lignite Corp (NLC).
Shares of NLC closed at Rs 59.80 on the Bombay Stock Exchange (BSE), down 4.24 per cent from the last close.
Earlier this month, market regulator Securities and Exchange Board of India (Sebi) had given its consent to the Tamil Nadu government’s proposal to buy the Centre’s entire shares on offer in NLC provided the acquisition is done by a qualified state entity through the IPP route. The TN government has said it has 5 state PSUs which can be qualified as QIBs.
The DoD has sought exemption from Sebi so that prefernce is given to allot shares to these PSUs only. The EGoM will meet again to decide whether there would be a minimum floor price or a price band for the IPP.
Tamil Nadu Chief Minister J Jayalalithaa had written to Prime Minister Manmohan Singh last month saying that the state would buy the 5 per cent of Centre’s equity that is being divested. The Union Cabinet had earlier cleared the sale of 5 per cent of government’s stake in Neyveli Lignite Corporation through an offer for sale.
Since the IPP mode is allowed only to meet the pubic holding norm minimum 10 per cent, the department would now sell only 3.56 per cent or over 5.58 crore shares. ‘The EGoM approved 3.56 per cent disinvestment in Neyveli Lignite though IPP,’ Disinvestment Secretary Ravi Mathur told reporters after a meeting of the Empowered Group of Ministers (EGoM).
The DoD has written to Sebi seeking preference to Tamil Nadu state PSUs, he said, adding that the Department would now file the offer document with Sebi and after that the issue would hit the market. Sources, however, said that the issue is likely only in the first week of August.
The Union Government holds 93.56 per cent stake in Neyveli Lignite Corp (NLC).
Shares of NLC closed at Rs 59.80 on the Bombay Stock Exchange (BSE), down 4.24 per cent from the last close.
Earlier this month, market regulator Securities and Exchange Board of India (Sebi) had given its consent to the Tamil Nadu government’s proposal to buy the Centre’s entire shares on offer in NLC provided the acquisition is done by a qualified state entity through the IPP route. The TN government has said it has 5 state PSUs which can be qualified as QIBs.
The DoD has sought exemption from Sebi so that prefernce is given to allot shares to these PSUs only. The EGoM will meet again to decide whether there would be a minimum floor price or a price band for the IPP.
Tamil Nadu Chief Minister J Jayalalithaa had written to Prime Minister Manmohan Singh last month saying that the state would buy the 5 per cent of Centre’s equity that is being divested. The Union Cabinet had earlier cleared the sale of 5 per cent of government’s stake in Neyveli Lignite Corporation through an offer for sale.
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