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Monday, December 10, 2012

NMDC Offer to Speed Up UPA’s Sale Calendar

ISSUE LIKELY TO DEBUT DAY AFTER


EGoM to decide on final price today as govt looks to add . 6,000 cr from year's 2nd selloff


    A panel of ministers will meet on Monday to finalise the price for selling a 10% stake in state-run miner NMDC as the government makes one more attempt to add momentum to its disinvestment programme. A senior government official said the empowered group of ministers (EGoM) headed by Finance Minister P Chidambaram will consider a proposal to price the share sale at . 145-150 per share, 5-8% less than the current market price of . 158.70. The first round of disinvestment in the company took place at . 300 per share in 2008. If the EGoM approves the price, the share sale is likely to take place on Wednesday through the offer-for-sale (OFS) route, enabling the government to raise around . 6,000 crore. 
The . 4,500-crore Bharti Infratel IPO is also slated for next week, and the
successful closure of the two issues could provide impetus to the primary markets that have been lying dormant for a long time. The last big-ticket IPO in the country was Coal India, which raised . 15,200 crore in 2010. 
The government had set a disinvestment target of . 30,000 crore in 2012-13, but was unable to undertake any share sale in the first six months of the current fiscal as there were differences over pricing and other issues. Several companies, including Nalco and Bhel, were considered as disin
vestment candidates, but no headway was made due to various reasons. The disinvestment programme for the year finally kicked off with the . 807-crore Hindustan Copper IPO last month. The government hopes to raise . 12,500 crore from the sale of NTPC shares and . 2,500 crore by selling 10% stake in Oil India in the current fiscal. The department of disinvestment will make a presentation to the government on December 15 for the follow-on offer of NTPC. 
If all these share sales happen, the government should be able to mop up over . 22,000 crore, which will still be less than the target of . 30,000 crore. 
IMG to Recommend NMDC Price to EGoM 
Share sale proceedings had fetched . 23,553 crore in 2009-10, followed by . 22,144 crore in 2010-11. 
The members of the interministerial group (IMG) on disinvestment will meet on Monday morning to recommend the price band for the NMDC share sale to the EGoM, which will take the final decision. The panel of ministers had recently rejected the price that had 
been recommended for Nalco. If the NMDC disinvestment takes place, the government's stake in the mining company will fall to 80% from 90% now. 
In February 2008, the government had divested an 8.4% stake in NMDC at . 300 per share, aggregating . 9,330 crore, which was largely subscribed by LIC. NMDC shares are currently trading at a heavy discount to the last sale price of the government.


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