Govt to sell 5% stake in SAIL on Friday

The government will kick off its disinvestment programme with the sale of 5-per cent stake in state-run Steel Authority of India Ltd (SAIL), worth around Rs 1,768.90 crore ($286 million) at current prices, on Friday.

SAIL will sell up to 20,65,26,264 shares of face value Rs10 each, representing 5 per cent of the company's total paid-up capital.

The government, which has 80 per cent stake in SAIL, plans to offload these shares through an auction on the Bombay and National stock exchanges, according to a regulatory filing.

The offer will commence in the morning and will be conducted during trading hours (9:15 am to 3:30 pm) on separate windows of the two stock exchanges, on 5 December.

Bidders can bid under retail category and non-retail category and the cut-off rates for the two will be determined separately, according to the filing.

Retail investors, however, will get a five per cent discount to the bid price entered by them, in accordance with SEBI OFC norms.

No single buyer other than mutual funds and insurance companies will be allocated more than 25 per cent of the shares on offer.

Retail investors can bid for shares of a total value of a maximun Rs2,00,000 across stock exchanges.

Allocation of shares to retail investors will be made on price priority method at multiple clearing prices in accordance with SEBI norms. Any unutilised portion of the retail category shares will be offered to non-retail investors.

In case of excess demand in the retail category at the cut-off price, allocation will be made on proportionate basis, it said.

Allocation to non-retail bidders will be at or above the floor price on price priority method of multiple clearing prices, in accordance with SEBI norms.

A minimum of 25 per cent of shares is reserved for mutual funds registered as per SEBI requirements. Any unsubscribed portion will be offered to other bidders.

Axis Capital Ltd, Deutsche Equities India Pvt Ltd, HSBC Securities and Capital Markets (India) Pvt Ltd, J P Morgan India Pvt Ltd, Kotak Securities Ltd and SBICAP Securities Ltd will sell the securities on behalf of SAIL.

Friday's sale would mark the first stake sale under the Narendra Modi government, which won a landslide election in May largely on a promise of economic growth.

India, which has targeted to raise about Rs60,000 crore ($9.5 billion) through share sales by March, is planning a 5 per cent stake sale in Oil and Natural Gas Corp and a 10 per cent stake sale in Coal India for the bulk of the proceeds.