State-owned Steel Authority of India (SAIL) said it has invited merchant bankers to manage the first phase of its share 
In the first tranche of the 20 per cent share sale programme, the government plans to divest 5 per cent of its stake in the company, while steel giant will issue additional shares equivalent to five per cent stake, SAIL said in a public announcement on Monday.
The government had in April cleared a proposal to sell 20 per cent equity in SAIL through a follow-on public offer.
The steel Ministry had suggested to sell shares in one-go rather than the proposal of two-tranche disinvestment. But, later it was decided to carry the share sale in two phases.
“Market conditions are expected to improve further, so it was decided to go with the proposed two-phase disinvestment. Also, SAIL does not require the entire sum right away,” a Steel Ministry official said.
As per the proposal, the government will divest 10 per cent of its stake and the company will issue fresh equity in the same proportion, which may help raise a total Rs 16,000 crore, Steel Minister Virbhadra Singh had earlier said.
At present, the government holds a little over 85 per cent stake in SAIL and post-FPO, its equity in the company is expected to go down to about 69 per cent.
SAIL wants to part fund its Rs 70,000 crore expansion programme with the proceeds of the share sale while for government the stake dilution would be part of its plan to raise Rs 40,000 crore this fiscal through disinvestment in PSUs like SAIl, Coal India, RINL, among others.
Even as SAIL invited merchant bankers, it still awaits certain clearances from the government.
It is still awaiting clearances from the Appointments Committee of the Cabinet to trim its board size and appoint independent directors.
Steel Secretary Atul Chaturvedi had earlier said that the FPO could be launched in October-November, but there was a fear that the share sale may not hit the market this calender year due to the regulatory hurdles.
Shares of SAIL were trading at Rs 203.50 on the BSE, down 0.07 per cent from previous close.