SAIL Disinvestment: Govt to sell up to 10% stake in SAIL, OFS to open on Jan 14

• SAIL OFS opens on Thursday (January 14) for non-retail investors

• 5% of the shares sold may be offered to eligible and willing employees, said SAIL

New Delhi: The Central government has announced its plan for disinvestment of 5 percent share in Steel Authority of India Limited (SAIL) through an Offer for Sale (OFS) on Wednesday. In case of over-subscription, the government will exercise the greenshoe option and offload additional 5 percent shareholding. The OFS opens on January 14 for non-retail investors. In a tweet, Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey said, "Offer for Sale (OFS) in SAIL opens on Thursday (14.1.2021)for non-retail investors. 15th January (Friday) is for retail investors. GoI would divest 5 percent equity with a 5 percent greenshoe option."

The floor price has been fixed as Rs 64, which offers a discount of 14.32 percent to Wednesday's closing price of Rs 74.70 on BSE. 

Disinvestment: Govt likely to raise Rs 1,322 cr from SAIL OFS

At the floor price and for the base offer, the government is likely to raise Rs 1,322 crore by selling 5 percent stake in SAIL. If the government exercises the greenshoe option, then the government will raise over Rs 2,600 crore in total. The total OFS size has been calculated at 206,526,264 equity shares of the face value of Rs 10 each (Base Offer Size), with an option to additionally sell up to 206,526,264 equity shares of the firm (over-subscription option). 

The greenshoe option is a provision that allows the underwriter of a public offer to sell additional shares to the public in case of over subscription.
In a regulatory filing to the stock exchanges, SAIL said that 12.5 percent of the offershares will be reserved for allocation to retail investors. No single bidder, other than mutual funds registered with SEBI, will be allocated over 25 percent of the offer shares. 

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Employee category

"Such number of Equity Shares as would be equivalent to up to 5 percent of the Equity Shares sold pursuant to the Offer (over and above the Offer Shares) may be offered to eligible and willing employees of the Company subsequent to completion of the Offer… The employees will be eligible to apply for equity shares up to Rs 500,000. However, any bids by eligible employees will be considered for allocation, in the first instance, for an amount of rS 200,000," SAIL said in the regulatory filing.

The backdrop

Earlier in the day, the government announced Indian Railway Finance Corporation's initial public offering (IPO) of about Rs 4,600 crore. The government is chasing a disinvestment target of Rs 2.1 lakh crore. However, DIPAM has so far managed to raise only Rs 30,000 crore. The Covid-19 pandemic has slowed the progress of all of the government's big disinvestment plans for the year.

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