Mining heavyweight National Mineral Development Corporation (NMDC) became the first navratna public sector undertaking to be disinvested by the new government.
The UPA government on Tuesday cleared the proposal to divest 8.38 per cent stake in the company. The proposal, approved by the ministry of steel, will be sent to the disinvestment department, said steel secretary PK Rastogi.
"The department will now initiate the process of disinvestment. The stake sale will bring in around Rs 12,000 crore for the government,” he said.
Post divestment, the government's stake in the company would come down to 90 per cent. NMDC is one of the 15 listed public sector companies including Hindustan Copper, MMTC and HMT where government has more than 85 per cent shareholding.
The company's share price went up 7.5 per cent on Tuesday to Rs 366.65, taking its market capitalisation to Rs 1,45,366 crore.
Post divestment NMDC would comply with the SEBI requirement of a minimum free float of 10 per cent for listing shares on the stock markets.
The PSU however has no plans to bring in a follow-on public offer to raise capital for at least another year.
"We have very healthy cash reserves and are in no need of capital for our expansion projects atleast within the next one year," said a senior company official. "Any FPO will be considered only after a year or so."