Government may take the IPO route for Balco’s price discovery

NEW DELHI: The government may go for an initial public offer ( IPO) of Balco shares to determine the firm’s current market price before it divests its 49% residual stake to Vedanta Group, which had acquired majority control in the aluminum producer in 2001. The government also plans to appoint an independent valuer to determine the price at which it should sell its 29.5% holding in Hindustan Zinc to a Vedanta Group company.

The zinc maker is already listed, and the divestment price will be the higher of the two prices suggested by the valuer and the market-determined price under Sebi norms. As per the takeover code, the price for such transactions is based on the average share price over the last 26 weeks. A final decision will be taken by the Cabinet Committee of Economic Affairs.

Sterlite Industries, a Vedanta Group company, owns 51% stake in Balco, while group firm Sterlite Opportunities and Venture owns 64.92% stake in Hindustan Zinc. Earlier this year, the Vedanta approached the government for an out-of-court settlement with an offer to buy out the government’s 49% stake in Balco at Rs 152 a share.