A week before the initial public offer (IPO) of Rashtriya Ispat Nigam Limited (RINL) was to be launched, the government’s divestment process took a big knock with the Department of Disinvestment (DoD) deciding not to go ahead with the proposed public issue for now.
In a development that surprised many market analysts and investment bankers, the finance ministry in a terse statement on Tuesday evening said that the government has decided not to proceed with the public issue of the Vizag-based steelmaker currently. The statement, however, did not give any reason for the decision.
According to sources in the DoD, a disagreement between the department officials and the investment bankers on the price band being suggested by the latter led to the issue being deferred. “The bankers had quoted a very low price band for RINL which was not agreeable to us. The price band did not adequately reflect the right valuation of RINL,” a DoD official, familiar with the development, told The New Indian Express.
UBS Securities India and Deutsche Equities (India) Private Limited are the investment bankers managing the RINL issue. According to sources, the bankers had suggested a price band of `15-17, which was not acceptable to DoD officials.
This is not the first time that RINL’s IPO has been deferred. In June and July this year, the issue was postponed due to volatile market conditions and a fire at the company’s plant that claimed 19 lives.