Sebi allows preference to Tamil Nadu govt in Neyveli stakesale
New Delhi: Paving the way of disinvestment of Neyveli Lignite Corp, market regulator Sebi has permitted Tamil Nadu state entities to buy shares on preferential basis during the proposed government's 3.56 percent stake sale.
Sebi in a communication to the Disinvestment Department has said other states in which Neyveli's generating units are located should also be given preference in allotment of shares.
"It has been decided...To treat QIBs belonging to government of Tamil Nadu as separate QIBs...For the purpose of allotment in IPP," Sebi's letter said.
Tamil Nadu government has been insisting that it would buy the entire central government stake that is being divested in the state lignite mining and power producing company.
Market regulator Sebi had earlier this month given its consent to state government's proposal, provided the acquisition is done by a qualified state entity through the IPP route.
The TN government has said it has 5 state PSUs which can be qualified as QIBs. The DoD has sought exemption from Sebi so that preference is given to allot shares to these PSUs only
The Sebi letter further said that the institutional placement programme (IPP) would be subject to the pricing norms for qualified institutional placement and lock-in regulations.
Sebi said preference can be given to the qualified institutional buyers belonging to the state government where NLC's units are located, over the mutual fund and insurance companies.
Earlier this week, the Empowered Group of Ministers (EGoM) cleared the disinvestment of 3.56 percent stake in Neyveli Lignite through an IPP
The DoD had written to Sebi after the EGoM meeting seeking preference for Tamil Nadu state PSUs in the IPP mode.
Government currently holds 93.56 percent stake in Neyveli Lignite Corp (NLC).
Shares of NLC closed at Rs 59.75 on the BSE, down 0.25 percent over previous close on BSE. At this price, the government could garner over Rs 300 crore.
The stake sale is being proposed to meet the minimum public holding norm. SEBI has set a deadline of August 8, 2013, for all listed central public sector units to have a minimum 10 percent public shareholding.
The department of disinvestment (DoD) was originally planning to divest 5 percent of its stake in the Tamil Nadu-based mining company.
However, since the IPP mode is allowed only to bring down promoter stake to 10 percent, the department would now sell only 3.56 percent or over 5.58 crore shares in the company to lower stake to 90 percent.