The Rs 8,000-crore follow-on public offer (FPO) of maharatna steel company Steel Authority of India Ltd (SAIL) may see another postponement as choppy market conditions are likely to fetch a lower price for the company’s shares.
The offer, where the government would divest 5% of its equity while the company would issue fresh shares for another 5%, has been hanging in the air since October last year and has already been postponed twice.
“We are currently assessing the market conditions, which appear to be very choppy and erratic,” said CS Verma, chairman, SAIL. “All approvals for the FPO are in place and our board approved the red herring prospectus last week. We were planning to launch it in mid June, but are in no hurry. There is no deadline and so long as we feel we will not get the right price for our shares we would not launch it.”
Last October, SAIL was not able to launch its FPO as it did not have the requisite number of independent directors on its board. Earlier in February, the offer got delayed as there was an issue regarding conflict of interest between common merchant bankers involved in SAIL’s offering with that of Tata Steel.
“Currently, all PSU shares like Power Grid, NHPC, NTPC etc are quoting at below the market price,” Verma said. “The government wants to get the best price while we as a company do not need the capital immediately. FPO or no FPO, our capex plans would remain on track. There should be some stability in the markets.”