Government appoints 4 merchant bankers for BHEL follow-on offer

The government has appointed four merchant bankers, including ICICI Securities and Morgan Stanley, DSP Merrill Lynch Bank of America and Kotak Mahindra Capital, to manage the over $1 billion follow-on public offer (FPO) of Bharat Heavy Electricals Ltd (BHEL), which is expected to hit the market during the Diwali period.

The government is selling 5 per cent of the company's equity stake comprising 2,44,76,000 shares of face value Rs10 each (or 12,23,80,000 shares of face value Rs2 each), out of its 67.72 per cent shareholding, through a follow-on public offer, in the domestic market.

The sale of five per cent stake in the power equipment maker is expected to mop up over $1 billion (about Rs4,700 crore) for the government.

A part of the public offer will be reserved for employees of the company.

"We expect the issue (FPO) around Diwali time. That's the best time," sources said. Diwali falls in the second half of October this year.

The proposed share sale in BHEL is part of government's ambitious programme to garner Rs40,000 crore through disinvestment in the current fiscal.

The government has mopped up more than Rs1,100 crore by divesting five per cent equity in Power Finance Corporation (PFC) in the current fiscal.

In the last financial year, disinvestments raked in Rs22,762.96 crore, much lower than the set target of Rs40,000 crore.