Global I-banks keep off IPO of govt-run NBCC

NEW DELHI: Global merchant banks, which have so far worked on the government's share-sale programme quoting abysmally low fees, have decided to stay away from the proposed 10% share sale in state-run National Buildings Construction Corporation ( NBCC).

Even after two extensions to the bids deadline, relaxation in the norms for bankers' appointment, and a change in the fee structure, the department of disinvestment has received 10 bids only from domestic investment banks, which have apparently quoted high fees.

The government has short-listed seven domestic banks. IDBI Caps was selected as the lead bank as it has quoted the lowest fee of 2.43 crore. However, no other bank decided to match the lowest bid. As a result, the government is in a bind. As per the original plan, the government was scheduled to appoint two merchant banks for the issue.

Other banks, including SBI Cap, ICICI Securities, Enam Securities, Kotak Mahindra, JM Financial, have bid between 5.6 crore and 7.5 crore.

A senior department official, however, down played the lack of interest on the part of foreign merchant bankers. "It's a small issue and that is why there was not much interest from foreign bankers; there is nothing more to it," he said, adding that issues related to fee structure will soon be resolved. The government hopes to raise about 150 crore from a 10% divestment in NBCC, a managing director of a domestic investment bank said.