Engineers India set for fresh 10% stake sale

The government has decided to dilute another 10 per cent equity stake in Engineers India (EIL) through a follow-on public offer

The government has decided to dilute another 10 per cent equity stake in Engineers India (EIL) through a follow-on public offer (FPO) that could see the exchequer raising around Rs 525 crore. This is the second time the government is diluting stake in Engineers India,having offloaded 10 per cent stake in 2010.

The government intends to further disinvest 10 per cent paid-up equity share capital of Engineers India comprising 3,36,93,660 shares out of shareholding of 80.40 per cent,through Further Public Offering in the domestic market. Up to 5 per cent of the public offering will be reserved for the employees of the company, said a notice issued by the department of divestment (DoD).

The stake sale,however,is expected to hit the market only around July. While DoD has initiated the process of appointing merchant bankers by inviting expression of interest,it takes at least a couple of months to complete the FPO procedure,including filing the prospectus with the Sebi.

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Incidentally,this would be the first time since 2011 when the government would dilute stake in a listed PSU by a follow-on offering.

In May 2011,government diluted a part of its stake in Power Finance Corporation through an FPO.

Since then,most stake sales by the government has been by way of the hugely-popular offer for sale route,which also helped listed PSUs to comply with the minimum public shareholding norms.

Shares of EIL gained 2.26 per cent on Monday to close at Rs 156.10. FE

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