RINL to go for financial restructuring for better IPO price
New Delhi: State-owned Rashtriya Ispat Nigam (RINL) has decided to initiate a slew of financial restructuring measures and merge a subsidiary with a view to getting better value through initial public offering (IPO).
"In order to fetch a better value of the company through IPO, a decision has been taken to reduce equity capital base of RINL considerably by transferring 40-60 percent into reserves," Steel Minister Beni Prasad Verma said in a written reply to the Rajya Sabha.
"Decision has also been taken to "early redemption of an amount of Rs 1,632 crore of seven percent of preference share capital," the Minister said.
At the same time, Eastern Investment (EIL), a subsidiary of the company, would be merged with the company by swapping the shares of RINL and EIL through cash-less transaction.
"RINL has already started working on these issues," Verma said.
The government could not proceed with the RINL IPO at least thrice this year due to various reasons including a fire that broke out in its lone facility at Vizag.
The latest attempt in October failed due to difference of opinion on valuations between the government and Book Running Lead Managers (BRLMs) of the issue.
"The BRLMs recommended a price band of Rs 15-17 per share, which was felt as not adequately reflective of the valuation of RINL," Verma said.
The BRLMs had mentioned that RINL would typically be valued on EV/EBITDA multiple, price to book multiple (P/B) and Discounted Cash Flow (DCF) analysis.
"BRLMs also stated that SAIL would be considered the closest peer of RINL for valuation purposes while applying multiples," the Minister said.
Verma said trade union leaders have been communicated about the advantage of company getting listed.
"Since the company is on a growth path, it is essential for the company to get listed for its visibility across the globe," Verma said.