India Delays Hindustan Copper, Steel Share Offers, Hampering Record Goal
India will delay share sales in Hindustan Copper Ltd. and Steel Authority of India Ltd. by at least two months, hampering efforts to raise a record 400 billion rupees ($8.6 billion) from asset sales this fiscal year.
Steel Authority, the nation’s second-largest producer, may sell stock in January, Atul Chaturvedi, secretary at the steel ministry, told reporters today in New Delhi. Hindustan Copper, India’s sole copper miner, may have its share sale in November, according to two people familiar with the matter.
India’s cabinet in June approved stake sales in Coal India Ltd. and Hindustan Copper as part of an asset-sale program to be completed by March 31. Prime Minister Manmohan Singh’s government planned to sell shares in one state-run company almost every month to raise funds for building roads, ports and hospitals and grow the economy 8.5 percent this fiscal year.
“It would’ve been difficult to successfully complete both Hindustan Copper and Steel Authority sales in the same month and the delay will remove any liquidity issue,” said Alex K. Mathews, research head at Geojit BNP Paribas Financial Services Ltd. in Kochi, in southern India. “The delay will benefit Hindustan Copper as a pick-up in construction and industrial activity post-monsoon will spur demand for the metal.”
Similar Stakes
The government, which owns 85.8 percent of New Delhi-based Steel Authority, will sell a 10 percent stake, while the company will sell an equivalent proportion of new shares. Kolkata-based Hindustan Copper and the government will sell similar-sized stakes. Hindustan Copper spokeswoman Shampa Lahiri declined to comment on the timing of the share sale.
Steel Authority shares would be sold in October-November, Chaturvedi had said in May. Hindustan Copper Chairman Shakeel Ahmed had said in June the sale may raise as much as 40 billion rupees by September.
Shares of Steel Authority rose as much as 1 percent to 198.80 rupees and traded at 198 rupees as of 12:04 p.m. in Mumbai. Hindustan Copper shares fell as much as 0.5 percent to 454.60 rupees and traded at 455.50 rupees, down 0.2 percent. The key Sensitive Index, or Sensex, fell 0.1 percent.
Hindustan Copper shares have gained 64 percent this year, valuing the stake at about 84 billion rupees. The benchmark Sensitive Index has risen 4.3 percent in 2010.
Sale Managers
UBS Securities India Pvt., ICICI Securities Ltd., SBI Capital Markets Ltd., Kotak Mahindra Capital Co. and Enam Securities Direct Pvt. are managing the share sale, Hindustan Copper said on its website July 2. Banks interested in managing the sale of Steel Authority have until Aug. 23 to submit bids, the company said in an advertisement in the Economic Times on Aug. 2.
India may raise as much as 150 billion rupees selling shares in Coal India by October in India’s largest initial offering, two people with knowledge of the matter said on Aug. 6. Share sale documents for Hindustan Copper are expected to be filed with the capital markets regulator in the first week of next month, one of the people said.
The government said in January it may sell shares in 60 state-run companies to shrink its budget deficit to 5.5 percent of gross domestic product this fiscal year from 6.9 percent last year. Since April, two state-run companies have tapped the markets as part of that initiative.
Private and state-run companies in the country have raised 660 billion rupees in share sales this year, according to Bloomberg data. Average fees for the period were 0.7 percent, the data show.
State deals are completed for fees of less than 1 percent because as many as 20 investment banks compete for a single sale. The fees for Coal India may be 0.000001 percent of the amount raised, according to two bankers with knowledge of the deal.
To contact the reporters on this story: Abhishek Shanker in Mumbai at ashanker1@bloomberg.net Tushar Dhara in New Delhi at tdhara1@bloomberg.net
Rate this Page