The market regulator gives its consent provided the acquisition is done by a qualified state entity

The government said on Sunday that market regulator Sebi has given its consent to the Tamil Nadu government’s proposal to buy 5 per cent stake in Neyveli Lignite Corp (NLC), provided the acquisition is done by a qualified state entity.

“SEBI is of the view that the proposal could get covered within the guidelines on IPP. However, the exact details that require discussions with the officials of the Government of Tamil Nadu, Ministry of Coal and Department of Disinvestment need to be worked out,” an official statement said.

The Department of Disinvestment (DoD) had sought Sebi’s views on the Tamil Nadu government’s proposal to buy 5 per cent of Centre’s stake in NLC disinvestment.

Sebi has written back to the disinvestment department last week saying that the 5 per cent stake sale should be done to the state PSUs through the Institutional Placement Programme (IPP) route. Also, the acquirer has to be registered with SEBI as a Qualified Institutional Buyer (QIB).

“In the offer document for IPP, the seller can propose the criteria on the basis of which allocation could be made. This can be used to give preference to any set of Qualified Institutional Buyers including state undertakings of Tamil Nadu,” the statement added.

“Ministry of Finance has requested the Government of Tamil Nadu to nominate a senior official for further discussions with SEBI with regard to its proposal,” it concluded.

Sebi, sources said, has now asked the Tamil Nadu government to send a concrete proposal and the list of state PSUs which could buy shares in NLC.

The Centre currently holds 93.56 per cent stake in NLC. The stake sale is being proposed done to meet the minimum public holding norm. SEBI has set a deadline of August 8, 2013, for all listed central public sector units to have a minimum 10 per cent public shareholding.

The Cabinet had last month cleared sale of 7.8 crore shares, or 5 per cent of government’s stake, through an offer for sale in NLC to raise Rs 455 crore at current prices.

Shares of NLC on Friday closed at Rs 58.30 on the BSE.

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