Govt invites bids from merchant bankers for NBCC stake-sale

The Centre on Friday invited bids from merchant bankers to carry out stake-sale in public sector construction company NBCC India (formerly National Buildings Construction Corporation).

The Centre intends to disinvest 15 per cent paid-up equity capital (nine crore shares each of face value ₹2 each) of NBCC out of its shareholding of 90 per cent, through offer for sale (OFS) of shares by promoters through the stock exchanges.

The Department of Investment and Public Asset Management under the Ministry of Finance on Friday came out with an RFP (request for proposal).

‘Selling broker’ role too “The government is also considering allotting shares to eligible and willing employees of NBCC at a discount of 5 per cent to the issue/discovered price (lowest cut-off price) up to a maximum of 0.75 per cent of the OFS size subsequent to completion of the transaction under OFS. The employees will be eligible to apply for shares up to ₹2 lakh only.

“Merchant bankers/selling brokers will be required to render such assistance as may be required in this connection,” the note said.

The government has invited proposals from merchant bankers to assist and advise the government in the process. Additionally, the merchant banker(s) or their associate(s) would be required to act as ‘selling broker’ for the proposed OFS.

The merchant banker will be required to structure the OFS in conformity with the prevailing framework, advise on the regulatory norms, conduct market surveys, domestic and international road shows to generate interest; and on completion of the transaction, transfer funds and/or unsold shares to the government account.

“The selected bankers will submit to the concerned DIPAM (Department of Disinvestment) officer a separate list of investors of both domestic and international investors, to be approached by each of the selected bankers respectively for the OFS,” the note added. They will also prepare a detailed strategy for reaching out to retail investors so as to create awareness about retail participation in the OFS.

Bidders should have handled and completed at least one domestic equity issue (initial public offering or follow-on public offering or OFS) of the size of ₹500 crore or more during the period April 1, 2013 to June 30, 2016.

The issued and subscribed equity capital of NBCC India as on March 31, 2016, was ₹120 crore. Government of India holds 90 per cent of the equity, the balance 10 per cent is held by the public, which includes foreign institutional investors, domestic institutional investors, non-institutions and bodies corporate.

The Cabinet Committee on Economic Affairs on July 13 had approved disinvestment of 15 per cent paid-up equity in NBCC India out of the government’s 90 per cent shareholding.