Saraf and Partners acts for Government of India on disinvestment of 93.71% of shares of 6 Public State Enterprises

Saraf & Partners advised Department of Disinvestment & Public Asset Management (DIPAM), Government of India in disinvestment of 93.71% of shares of 4 Central Public State Enterprises - MMTC, NMDC, BHEL, MECON, and 2 Odisha Government PSUs - OMC and IPICOL in Neelanchal Ispat Nigam Limited (NINL).

Tata Steel Long Products Limited has been declared the highest bidder with bid on enterprise valuation of ₹12,100 crores (approx. US$ 1.62 billion).

Saraf and Partners advised and acted for the Government Department (DIPAM) to undertake the transaction upon request of the selling shareholders and pursuant to authorization by Cabinet Committee on Economic Affairs in its ‘in-principle’ decision.

The transaction team of Saraf and Partners was led by Akshay Nagpal (Partner) and Akshay Jain (Partner), and comprised of Udyan Arya Shrivastava, Nikhil Issar, Prakhar Mittal, Akshay Sharma and Prarthna Bathija (Associates).

The disinvestment of NINL took place through an open-market, competitive bidding process towards the enterprise value of NINL comprising the liabilities of the company as on March 31, 2021 and the 93.71% equity of the company held by the 6 selling PSE shareholders. The selling shareholders did not have any separate external legal counsel for the transaction.

This deal is of immense significance as this is the first instance of privatization of a public sector steel manufacturing enterprise in India. This transaction will not only lead to recovery of debt by selling shareholders, debt by various public sector banks and realization of equity value by the selling shareholders, the disinvestment will be a big boost to the local economy of the region as the strategic buyer will be able to revive a closed plant, bring in modern technology, best managerial practices and make infusion of fresh capital, which will help in augmenting the capacity of the plant.

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