Govt calls for merchant bankers, legal advisors for 29.535% stake sale in Hindustan Zinc
Premium- At present, Vedanta holds 64.922% in HZL while the government holds 29.535%, and the remaining 5.543% is held by the general public.
The government has invited merchant banks and legal advisors regarding the disinvestment of its 29.535% stake in Hindustan Zinc (HZL). The government plans to exit its entire shareholding from the mining and resources producer. At present, Vedanta holds the controlling stake in HZL. While the merchant banker will responsible for the structuring of the strategic sale, the legal advisor's job will be in taking care of the regulations of the transaction. The Centre plans to divest its stake in HZL through the open market.
On Friday, the Department of Investment and Public Asset Management (DIPAM) in a notification said, "engagement of merchant bankers-cum-selling broker for the disinvestment of residual government's shareholding of 29.535% in Hindustan Zinc - Request for proposals." A similar notification was released for legal advisors as well.
In the notification, DIPAM announced that there is ₹1 lakh application fee for merchant banks, while there is no fee for legal advisors.
The due date for bidding is July 28 for merchant banks, while the due date is July 28 for legal advisors.
Technical bids will open from July 29 for merchant bankers and the same will open from August 1 for legal advisors, DIPAM notified.
"The decision in Centre for Public Interest Litigation (supra) does not apply to the present facts because HZL had ceased to be a government company, at the stage of the disinvestment which is in a challenge. Hence the Union Government’s decision to disinvest 29.54 percent of its residual shareholding in HZL is not interdicted by the principles laid down by this Court in Centre for Public Interest Litigation (supra)," DIPAM said in the notification.
It added, "The Union Government has stated through the Solicitor General that the residual shareholding shall be divested in the open market and shall take place in accordance with the rules and regulations of SEBI to ensure that the best price is realized for the sale of the shareholding…"
The merchant banker will have the task of advising the government on the timing and modalities of the disinvestment. Further, they will also prepare the structure of the strategic sale and required documents for the process.
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Meanwhile, the notification said, DIPAM, on behalf of the Government, requires the services of reputed Law Firms with experience and expertise in Public Offerings/OFS in capital markets to act as Legal Advisers and assist Government in the process. The Domestic Law Firm will act as the Legal Adviser to the transaction and submit Proposals in consortium with an International Law Firm of repute, with similar experience and expertise in Public Offerings/OFS in capital markets.
At present, Vedanta holds 64.922% in HZL while the government holds 29.535%, and the remaining 5.543% is held by the general public.
On BSE, HZL shares closed at ₹262.95 apiece up by 2.51%.