Department of Disinvestment, Ministry of Finance, Government of India has requested the Government of Tamil Nadu to nominate senior official for further discussions with SEBI with regard to its proposal to sell the proposed five per cent stake of the Government of India in Neyveli Lignite Corporation (NLC) to the State Undertakings of Tamil Nadu.

The Chief Minister of Tamil Nadu had earlier proposed that the State Undertakings of Tamil Nadu be sold the proposed five per cent stake of the Government of India in Neyveli Lignite Corporation through an Institutional Placement Programme. Before that, the Government of India had proposed to sell the shares through Offer for Sale (OFS) mechanism to the public in order to achieve the minimum public shareholding requirement.

Thereafter, the matter has been discussed with SEBI. SEBI is of the view that the proposal could get covered within the guidelines on IPP. However, the exact details needs to be worked-out that require discussions with the officials of the Government of Tamil Nadu, Ministry of Coal and Department of Disinvestment. In the offer document for IPP, the seller can propose the criteria on the basis of which allocation could be made. This can be used to give preference to any set of Qualified Institutional Buyers including State Undertakings of Tamil Nadu.

DSM

(Release ID :97070)

Institutional Placement Programme use to transfer government stake, allowing preferential allocation to state undertakings through allocation criteria. The Department of Disinvestment requested the Government of Tamil Nadu to nominate a senior official to discuss with SEBI a proposal to transfer a government equity stake in Neyveli Lignite Corporation to State Undertakings. SEBI indicated the transaction could fall under the Institutional Placement Programme framework, subject to detailed discussions with Tamil Nadu, the Ministry of Coal and the Department of Disinvestment. Under IPP offer documents the seller may set allocation criteria to prefer particular classes of Qualified Institutional Buyers, allowing State Undertakings to receive preferential allocation if specified.