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Five merchant bankers in race for EIL disinvestment

NEW DELHI: Five merchant bankers, including ICICI Securities and IDFCBSE -0.45 %, are in race to manage 10 per cent stake sale in Engineers India Ltd which could fetch the government about Rs 625 crore at current share price. 

EdelweissBSE 1.26 % Financial Services, IDBI Capital Market Services,Kotak MahindraBSE -0.67 % Capital Company and ICICI Securities would be making presentations before an inter-ministerial group (IMG) on May 20. 

"Financial bids (from merchant bankers) will be opened immediately after the presentations are over," according to the Department of Disinvestment. 

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

On the same day, the government will also select the legal advisors for the EIL's disinvestment programme. S & R Associates, Luthra & Luthra, Khaitan & Co and ALMT Legal are scheduled to make presentation. 

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 market price of Rs 186.3 a share, the 10 per cent stake sale could fetch about Rs 625 crore to the exchequer. Up to 5 per cent of the public offering will be reserved for the employees of the company. 

Government holds 80.40 per cent in EIL, a 'Miniratna' PSU In 2010, it had divested 10 per cent stake through an FPO in EIL. 

In January, the government had decided to go for further disinvestment 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. 

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

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.