DoT in talks with FinMin for splitting TCIL IPO via piggyback listing
The Department of Telecommunications (DoT) in consultation with the Finance Ministry plans to split the initial public offering involving 25 per cent stake in telecom engineering and consultancy firm Telecommunications Consultants India Ltd (TCIL) into parts.
This will involve TCIL raising funds by issuing 10 per cent fresh equity shares and the government divesting 15 per cent of its equity in the company.
Sources said the 10 per cent IPO may mobilize Rs 600 crore required to fund TCIL's own expansion plans and for its US subsidiary. The government share sale may fetch around Rs 1,000 crore.
As per the initial plan, the TCIL issue may come up around the July-September quarter. DIPAM will also shortly call for a meeting on the appointment of a merchant banker for the proposed IPO.
The market offer of the tecom consultancy firm is part of listing plan for six Central Public Sector Enterprises.
Sources said that DoT will soon move a cabinet note proposing the 25 per cent stake sale. This stake sale will also involve the company issuing fresh equity shares to mobilize resources for its own requirement as TCIL is undertaking many telecom and IT projects in India.
TCIL will use a provision called piggyback transactions of the disinvestment department, DIPAM. DIPAM rules say in case of issue of fresh equity in conjunction with the sale of the government stake (piggyback transactions) for listing, CCEA approval will be obtained by the ministry concerned — in this case, DoT.
Asked why the issue would go to the cabinet again given that the overall 25 per cent stake sale already has cabinet approval, sources said the original cabinet approval was not for the 15 per cent and 10 per cent split of equity.
"We need the funds for our project, so we had to go for the split," said the source.
Piggyback funding has already been done in Kochin Refinery earlier. In any case 25 per cent is a very high for listing. Normally equity sale for IPO happens for 10 -12 per cent range. If government is going for 15 per cent stake sale, then give 10 per cent to company also which is struggling for cash.
TCIL has an orderbook of Rs 10,000 crore and it needs to give advance bank guarantees for executing the order. This requires funding support where the public offer will come handy.
So far Cabinet nod has been received for the overall 25 per cent equity dilution not for the splitting of the IPO into 15 per cent (for government) and 10 per cent (for TCIL), sources said.
TCIL is one of the six PSU whose IPOs are lined up next fiscal, as per DIPAM roadmap.
Sources said the company is banking on its JV with Bharti -- Bharti-Hexacom -- which operates in North East and Rajasthan for higher valuation for its shares in the upcoming IPO.
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