RINL IPO deferred on pricing issues

The initial public offering of Rashtriya Ispat Nigam (RINL), has been deferred on a disagreement over pricing of the issue between the steel ministry officials and the merchant bankers to the issue. The issue was supposed to usher in the government's investment calendar.

This comes as the third deferment of the issue, for which a red-herring prospectus was filed with the stock market regulator on 18 May this year.

According to the DNA newspaper which qouted sources, the merchant bankers – UBS and Deutsche Securities – had recommended a price of Rs16-18 a share for the IPO, much below the current book value of the company of Rs22.50.

The government has plans to sell up to a 10 per cent stake or 48.90 crore shares in RINL through the issue.

The newspaper quoted a source as saying that RINL being a profit making company, the steel ministry did not want to sell shares below its book value on Monday and hence the pricing decision was not sent to the EGoM.  The source added that the ministry wanted the price to be issued at par with the book value.

The meeting of the empowered group of ministers (EGoM) scheduled for yesterday, which was to be chaired by the finance minister P Chidambaram to finalise the price, was called off.