No consensus on pricing, govt defers RINL IPO yet again

New Delhi: The initial public offer of Rashtriya Ispat Nigam (RINL) has been deferred for the third time as the Steel Ministry and merchant bankers could not arrive at a consensus on the price band.

The Government in a statement, however, said it “remains committed to the disinvestment programme…”.

[caption id=“attachment_485352” align=“alignleft” width=“380”]  RINL had proposed to make an initial public offer of 48.90 crore equity shares of Rs 10 each by way of an offer for sale.[/caption]

RINL issue was supposed to kick start the divestment programme through which the government aims to garner Rs 30,000 crore. The issue was slated to hit the markets on October 15. Its deferment comes a day after Finance Minister P Chidambaram asserted that divestment process would kick start with RINL issue.

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“We have lined up all the cases for the next six months. The first case (RINL) is coming up sometime this month,” Chidambaram had said on Monday. “The issue has been deferred,” RINL Chairman and Managing Director A P Choudhary told PTI earlier in the day.

Sources close to the development said the Steel Ministry was unwilling to sell shares at lower than the present book value of Rs 22.50 a share. Merchant bankers UBS Securities and Deutsche Equities (India) have proposed Rs 15-17 as the price band.

Differences had emerged in Monday’s meeting of the high level committee which was supposed to suggest the price band. Subsequently, the matter was referred to the EGoM to fix the price.

Sources said the Empowered Group of Ministers, headed by Finance Minister P Chidambaram, did not meet on Tuesday.

“As per the offer programme, mentioned in the Red Herring Prospectus, the offer was proposed to open on October 15, 2012 and close on October 18, 2012. In this regard, it is hereby informed that the Government has decided not to proceed with the offer programme currently,” the statement said. “(The government) will evaluate the decision (regarding the IPO timing) in due course keeping in view all the relevant factors,” it added.

RINL had proposed to make an initial public offer of 48.90 crore equity shares of Rs 10 each by way of an offer for sale.

The issue was previously deferred twice since the filing of the draft prospectus with market regulator Sebi on May 18 due to reasons as varied as volatile market conditions and fire at the company’s Vizag steel-making facility. In order to meet the disinvestment target of Rs 30,000 crore, the Department of Disinvestment (DoD), the nodal point for conducting PSU stake sale, has already got Cabinet approval for stake sale in seven companies, including RINL, Hindustan Copper, Oil India, MMTC, NALCO.

An official source said that government has identified four more PSUs – NMDC, NTPC, Power Grid Corporation (PGCIL) and Engineers India (EIL) – for divesting its minority stake.

PTI