The Department of Disinvestment (DoD) will soon appoint merchant bankers to manage 10 per cent stake sale in Engineers India Ltd (EIL) which may fetch Rs 520 crore to the exchequer.

The DoD has invited expressions of interest from merchant bankers, or singly or as a consortium, with experience in public offerings/OFS to act as book-running lead managers and to assist and advise Government in the process.

The Government plans to disinvest 10 per cent stake, or 3.36 crore shares of EIL through Further Public Offering (FPO) in the domestic market.

At the current market price of Rs 156 apiece, the 10 per cent stake sale could fetch over Rs 520 crore to the exchequer.

Up to 5 per cent of the public offering will be reserved for employees of the company.

The Government currently holds 80.40 per cent in EIL, a mini-ratna PSU. In 2010, it had divested 10 per cent stake through an FPO in EIL.

In January the Government had decided to offload its 10 stake in consultancy major EIL through public offer.

The paid-up equity capital of the company, as on March 31, 2012, was Rs 168.47 crore.

The EIL scrip was trading at Rs 156.25 on the BSE, up 2.36 per cent from its previous close.

EIL is a leading provider of design, engineering and project management and consultancy services firm for the hydrocarbon sector.

The EIL stake sale could not be done through the Offer For Sale (OFS) mechanism as the company is already compliant with market regulator SEBI’s public holding norms. Besides, it is not in the top 100 companies in terms of market capitalisation.

The Government used the OFS route, popularly known as the auction method, to divest its stake in PSUs, including Oil India, NTPC and NMDC and Hindustan Copper in last fiscal.

The Government proposes to raise Rs 40,000 crore by way of disinvestment in the current fiscal. The Government has already lined up a host of companies, including Coal India, Indian Oil and Hindustan Aeronautics, for stake sale in the current fiscal.

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