SAIL calls off roadshows for 6,500-crore FPO

MUMBAI: SAIL, the state-owned steel maker that planned a follow-on share sale to raise . 6,500 crore, has called off investor roadshows after a conflict of interest issue among banks leading the sale cropped up, two people familiar with the developments said.

The scrapping of the investor meets scheduled this week may lead to the government falling short of raising its targeted . 40,000 crore from sale of shares in state-owned companies . The cancellation does not mean that shares sale will not happen.

The government may strip off the mandates to SBI Capital Markets, HSBC, Deutsche Bank and Kotak Mahindra Capital for their involvement in the . 3,500-crore follow-on share sale of Tata Steel, the biggest rival of SAIL.

“It’s unethical,” steel minister Virbhadra Singh had said in New Delhi. “If this entails changing of bankers, then the FPO will be delayed.”

Of the six hired for the SAIL issue, JPMorgan and Enam Securities are the two which are not involved in Tata Steel issue. The rest are active in the Tata Steel share sale.

“There is a process wherein the mandated banks provide certification that there is no conflict of interest,” said a banker. “This was not done. In all good faith, the bankers should have brought it to the notice of the government that the timelines are close to each other.”

SAIL has already sent “showcause” notices to these banks, asking them to explain their position. Banks were asked to explain why they took up another FPO of a competing steel company when the first mandate was alive. SAIL fell 2.6% to . 157.15.

With the benchmark Sensex down more than 10% since its peak in November, share sales could get tougher as global investors balk at valuations.

The government has raised . 22,763 crore through sale of shares in hydro-power generator SJVN, consultants Engineers India, miners Coal India and MOIL, Power Grid Corp, Shipping Corp. Tata Steel’s share sale is led by Deutsche Bank, Standard Chartered, Citi, Kotak Mahindra, HSBC, SBI Caps and RBS.