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Price band debate defers RINL IPO

* Stake sale postponed for 3rd time

Written by ENS Economic Bureau | New Delhi |
October 10, 2012 12:57:45 am

A day after finance minister P Chidambaram unveiled plans to kickstart the stake sale programme,a planned disinvestment in Rashtriya Ispat Nigam Ltd was deferred due to difference over valuations. This is the third time the IPO of RINL has been postponed.

The finance ministry release said the government “remains committed to the disinvestment programme,” and it will evaluate the decision in due course keeping in view all relevant factors.”

The 10 per cent stake sale in the state-owned steel maker was expected to be open between October 15 and 18.

Deciding against the move,steel minister Beni Prasad Verma has argued that the price band for the offer cannot be below the book value. Merchant bankers had contended that the share should be attractively priced at about Rs 15 to Rs 17 each.

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“We are told that there has never been instances in IPOs where price bands have been below book value,” Verma told his ministry’s top brass in course of a meeting.

When Verma’s contention was conveyed by steel secretary DRS Chaudhary to secretary disinvestment Haleem Khan,the finance ministry decided to defer the issue,a source said.

Criticising the postponement,Prithvi Haldea,founder CMD of Prime Database said there is no particular sanctity of the book value that an issue price cannot dip below it.

“This is the problem that typically occurs when trying to sell an issue through institutional investors. I have been advising that the government would have been better off if it had made the offer only to retail investors.”

Govt mulls 9.5% stake sale in NTPC

Determined to meet its disinvestment target for the fiscal 2012-13,the Centre is considering further dilution of its equity in NTPC.

The department of disinvestment has finalised a proposal to divest 9.5 per cent of government equity in the company that could fetch as much as Rs 13,000 crore to the exchequer. The NTPC issue could substantially ease pressure to raise the targeted Rs 30,000 crore from disinvestment proceeds this year.

“We are preparing a note for disinvestment of government’s 9.5 per cent in NTPC which would be taken to the Cabinet at the right time,” power secretary P Uma Shankar said on the sidelines of the economic editors’ conference on Tuesday. Currently,the government’s shareholding in the maharatna is 84.5 per cent. FE

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