* Sale to run Mar 10-12, follow normal book building route
* Retail investors to get 5 percent discount
* Issue price range to be set on March 8 after ministers
* NMDC shares end down 1.5 pct in weak Mumbai mkt
(Adds details, background, share price)
By Pratish Narayanan and Prashant Mehra
MUMBAI, Feb 24 A share sale in India's
state-run miner NMDC Ltd (NMDC.BO) to raise about $3 billion
will open on March 10, and follow the standard book-building
system for Indian offerings, three sources with direct
knowledge of the deal said.
The NMDC sale, closing on March 12, will be the third major
stake sale by India's government this year, and the first that
will not follow a controversial 'French Auction' book-building
system that was seen as putting off investors.
Under the French Auction system, institutional investors
are allotted shares based on the value of their bid above a
base price. Bidders at a higher price will be given priority
when shares are allocated. Retail investors bid at the floor
The NMDC issue will follow the typical book-building
procedure for Indian share offerings, where a price band is set
and investors bid within that range, sources told Reuters.
The price range would be announced on March 8 after a
meeting of a panel of ministers, two of the sources, who did
not wish to be named as they were not authorised to speak to
the media, said.
Shares in NMDC ended down 1.5 percent at 430.65 rupees in a
Mumbai market .BSESN that fell 0.2 percent.
Retail investors and NMDC employees are likely to get a
discount of 5 percent to the issue price, sources said.
Citigroup (C.N), Morgan Stanley (MS.N), UBS UBSN.VX,
Kotak Mahindra Capital (KTKM.BO), Royal Bank of Scotland
(RBS.L) and Edelweiss Capital (EDEL.BO) are arrangers to the
This year's two major government stake sales -- in leading
power producer NTPC (NTPC.BO) and power-project financing firm
Rural Electrification Corp (REC) (RURL.BO) -- did not give a
discount to retail investors.
The REC sale, which closed on Tuesday, was covered more
than three times, helping raise about $760 million and easing
concerns that interest in government stake sales was waning.
This was in contrast to an earlier $1.8 billion sale in
NTPC that was covered on the final day after state-run Life
Insurance Corp of India and State Bank of India (SBI.BO)
stepped in to buy shares.
The government will sell an 8.38 percent stake in NMDC, the
country's top iron ore miner, bringing its public float in the
company to 10 percent. It owns more than 98 percent in the
The sale is part of the government's plan to offload stakes
in 60 state-run firms over the next few years as it tries to
raise funds for welfare programmes without stretching an
already wide fiscal gap.
Analysts estimate these sales could fetch between $6.5
billion and $11 billion in the fiscal year starting April 1.
(Editing by Surojit Gupta)