After being deferred three times in the last one year, the public issue of Rashtriya Ispat Nigam (RINL) is now facing fresh hurdles. The Securities and Exchange Board of India?s (Sebi) approval ? valid for one year ? will lapse in two weeks? time and is likely to impact the government?s FY14 disinvestment programme.
According to sources, there has been no progress made on RINL?s initial public offering (IPO) and the approval for the issue will lapse this time around. According to Prime Database, the company had received approval on June 27, 2012, carrying a validity of one year as per Sebi?s Issue of Capital and Disclosure Requirements (ICDR) Regulations.
?Nothing is being done on that (RINL) front. Since the expiry is two weeks away, the issue will lapse,? said a source, requesting anonymity.
The company had filed its red-herring prospectus (RHP) with Sebi in September 2012, and had 90 days to launch its issue. While the documents were withdrawn from the RoC, the issue was not pulled out in entirety, which means the department of divestment (DoD) could still go ahead with it, sources said.
Sources said failure on the part of the government to launch the issue would mean it would have to redo the entire process that is required to launch an IPO ? from filing draft prospectus, to receiving registrar of companies (RoC) and Sebi approval, and appointing merchant bankers, among other things.
A company official reiterated that the DoD has not communicated any details and is unaware about the progress made by the government. In that case, it is impossible to launch the issue before the expiry of the date approved by Sebi, the official said. ?It is a long process, and even if we get a ?go-ahead?, it would require another 3-4 months to launch the issue. By that time Sebi approval would have expired and we would have to redo all the formalities again,? the official said on conditions of anonymity.
Merchant bankers had already done the pre-marketing road show in Mumbai. Marketing road shows were also conducted in destinations like the US, London, Hong Kong, and Singapore among several other international destinations. ?The issue had received good feedback from overseas investors,? the company official added.
According to Prithvi Haldea, CMD, Prime Database, the company will have to update the documents for any ?material changes? and submit it with the Sebi and RoC. ?Anything that impacts or can impact investors? decisions in participating in the issue needs to be updated. It includes financial information, financial audit (quarterly and yearly results), risk factors, development in outstanding litigation or new litigation, change in directorships,? said Haldea.
The government had offered to sell around 48.9 crore shares in RINL with a target to raise around R2,500 crore.
However, the merchant bankers had recommended a price band of R15-17 per share, far lower than the company?s prevailing book value of R22.5. At the recommended price, the government would have garnered around R800-900 crore from the issue. UBS Securities and Deutsche Equities (India) are the lead managers to the RINL issue.
