NMDC IPO : Two Phased Disinvestment Plan

by khalid on 13/10/2009 · 0 comments


NMDC, state-owned and India’s biggest mining company, will tap the capital market in two phases. The government will first divest 8.38% of its equity stake through an initial public offer (IPO) in the current financial year, which will be followed by a follow-on offer (FPO) in next financial year 2010-11.

The Government has cleared a proposal to divest 8.38% of equity in NMDC through IPO, and this will fetch around Rs 12000 crore. However a final approval will be given by the Cabinet.

The entire proceeds of this IPO will go to the government, and the money raised in the second phase will be used by NMDC for its expansion plans. The expansion plans will start in next fiscal so the follow on offer (FPO) will hit the market in sometime by 2010 end.

NMDC’s expansion plan involves an investment of Rs 26000 crore over the next few years. The company has cash reserves of close to Rs 12000 crore and is confident of generating Rs 12000-16000 crore over the next three-four years. This would eliminate the need for the company to raise equity for financing expansion.

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