Government plans to sell 5 percent stake in Steel Authority of India Ltd., may rake in Rs1,000 crore

Feb 10,2020

The government is planning to sell a 5 percent stake in Steel Authority of India Ltd (SAIL) through an offer for sale, which could fetch about Rs1,000 crore to the exchequer, an official said.

Officials from the Department of Investment and Public Asset Management (DIPAM) and the Ministry of Steel are planning to organize roadshows for SAIL stake sales in Singapore and Hong Kong. However the roadshow in Hong Kong could be called off due to the outbreak of coronavirus.

The government has a stake in SAIL of 75 percent. In December 2014, it had last sold a 5 percent stake in steel's Central Public Sector Enterprises (CPSE).

An official said, “We are looking at a 5 percent stake sale via offer for sale (OFS), but we will assess investor demand in the roadshows.”

The government will collect around Rs1,000 crore at the current market price by selling a 5 per cent stake in the company. SAIL shares closed at Rs48.65 per share on Friday, down 0.51 percent on the previous close on the Bombay Stock Exchange (BSE).

In the current fiscal, the government may look to complete the transaction as it strives to achieve the Rs65,000 crore disinvestment target set in the revised estimates. So far this year, Rs34,000 crore has been mopped up from the selling of the CPSE stake and the remaining Rs31,000 crore has to come by March-end. For 2020-21, the government has budgeted to collect Rs1.20 lakh crore from the CPSE stake sale.

The Government also plans to sell a 10 percent stake in Garden Reach Shipbuilders & Engineers Ltd (GRSE) through an OFS out of its 74.50 percent shareholding. The stake sale at the current market price will yield Rs200 crore to the exchequer.

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