New Delhi: The Department of Telecommunications (DoT) in consultation with the Finance Ministry plans to split the initial public offering involving 25 per cent stake in telecom engineering and consultancy firm Telecommunications Consultants India Ltd (TCIL) into parts. This will involve TCIL raising funds by issuing 10 per cent fresh equity shares and the government divesting 15 per cent of its equity in the company.
Sources said the 10 per cent IPO may mobilize Rs 600 crore required to fund TCIL’s own expansion plans and for its US subsidiary. DIPAM will also shortly call for a meeting on the appointment of a merchant banker for the proposed IPO.
The market offer of the tecom consultancy firm is part of listing plan for six Central Public Sector Enterprises. Sources said that DoT will soon move a cabinet note proposing the 25 per cent stake sale. This stake sale will also involve the company issuing fresh equity shares to mobilize resources for its own requirement as TCIL is undertaking many telecom and IT projects in India.
TCIL will use a provision called piggyback transactions of the disinvestment department, DIPAM. DIPAM rules say in case of issue of fresh equity in conjunction with the sale of the government stake (piggyback transactions) for listing, CCEA approval will be obtained by the ministry concerned — in this case, DoT.
Asked why the issue would go to the cabinet again given that the overall 25 per cent stake sale already has cabinet approval, sources said the original cabinet approval was not for the 15 per cent and 10 per cent split of equity. “We need the funds for our project, so we had to go for the split,” said the source. Piggyback funding has already been done in Kochin Refinery earlier. In any case 25 per cent is a very high for listing. Normally equity sale for IPO happens for 10 -12 per cent range. If government is going for 15 per cent stake sale, then give 10 per cent to company also which is struggling for cash.
Cabinet nod has been received for the overall 25 per cent equity dilution not for the splitting of the IPO into 15 per cent (for government) and 10 per cent (for TCIL), sources said. (IANS)
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