Advertisements for Advisors

GOVERNMENT OF INDIA

MINISTRY OF DISINVESTMENT

ENGAGEMENT OF COORDINATOR CUM ADVISOR (CA) FOR

DISINVESTMENT IN IBP CO. LTD. (IBP) THROUGH DOMESTIC OFFERING

1.            Introduction

1.1       IBP Co. Ltd. (IBP) is a Public Sector Undertaking  (PSU) under the administrative control of Ministry of Petroleum & Natural Gas. IBP is engaged in manufacturing and marketing of Industrial Explosives and Cryo Vessels and marketing of petroleum products.  The paid-up capital of the company is Rs.22.15 crore. Indian Oil Corporation holds about 53.58% of the equity and as such IBP is its subsidiary.  At present, Government of India holds 26% of the equity of the company. The institutions and the public hold the balance 20.42%. The shares of the company are listed on the various stock exchanges in the country.  The company has 2093 retail outlets, 378 SKO/LDO agencies and 64 LPG distributorships. The total turnover and profit -after tax of the company during the year 2002-03 are Rs.8991 crore and Rs.88 crore respectively.   

2.            Government decision

2.1            Government of India (GOI) intends to disinvest its remaining stake of 26% of the equity shares of IBP through domestic offer through the Book Building process.  Expressions of Interest are invited, by 17.00 Hrs. (IST) on 19.9.2003, from reputed merchant/investment bankers either singly or as a consortium, with specific expertise in disinvestment through capital market offerings to act as Coordinator-cum-Advisor and to assist and advise the Government in this process.

3.            Responsibilities of the Coordinator-cum-Advisor (CA)

3.1       The Coordinator-cum-Advisor (CA) would be required, inter alia, to advise on the timings and the modalities of the capital market offer in order to ensure best returns to the Government. They would be required to advise on all aspects of the offering including assisting Government in identification and selection of legal advisors, accountants, other intermediaries and coordinate their work under the guidance of the Government, complete due-diligence, draft offering documents, red herring prospectus, etc. for the issue, coordinate with printers for timely completion and distribution of offering documents and other relevant material needed for sale. Their responsibilities would include pre-market survey, road shows, book building and generation of interest amongst prospective investors. The CA will also be required to do the market research along with pricing and allocation of shares and after sale support. They would also guide and facilitate in obtaining necessary approvals, completion of regulatory requirements including Listing etc. and perform all other responsibilities connected with such offerings.  The responsibilities of CA would also include appropriate underwriting connected with the offering.

3.2       Since it is desirable for Government to have two Coordinator-cum-Advisor, having adequate experience in similar offerings, Government would select two parties who together form a team and will be called Joint Coordinator-cum-Advisors (JCA). The JCAs selected will also have to form a syndicate including co-managers in consultation with Government.

4.            Submission of Expression of Interest

4.1            Reputed merchant/investment bankers with adequate and specific expertise in disinvestment through capital market offering are invited to submit Expressions of Interest either singly or as a consortium for selection as CA to Shri G. Ramachandran, Deputy Secretary, Ministry of Disinvestment, Room No.205, II Floor, Block No.11, CGO Complex, New Delhi-110 003. The bidders would be required to deposit along with the Expression of Interest, a non-refundable earnest fee of INR 40,000 by way of a demand draft drawn in favour of ‘Pay and Accounts Officer, Ministry of Disinvestment, New Delhi’ payable at Delhi. GOI reserves the sole right to accept or reject any or all Expressions of Interest without assigning any reasons therefor.  Together with the Expression of Interest, the following details are to be sent:

(i)        Full particulars of the constitution, ownership and main business activities of the prospective Coordinator-cum Advisor (bidder). In case of consortium bids, the particulars of the coordinating firm having the principal responsibility for the mandate as well as those of other parties.

(ii)                  Unabridged Annual Reports or audited financial accounts for the last three years of all the parties.

(iii)      Details of the pending litigation and contingent liabilities, if any, that could affect the performance of the bidder under the mandate, as also details of any past conviction and pending litigation against sponsors/partners, Directors etc., and any areas of possible conflicts of interest.

(iv)       Details of Domestic issues managed as Lead Manager/Book Runner or Co-Lead Manager/Co-Book Runner, in respect of issue size of more than Rs.100 crore are to be furnished in the format given in Annexure-I.

(v)            Understanding of the Company

Details of understanding and SWOT analysis of IBP may be furnished.

(vi)            Experience and presence in India

A brief note evidencing the prospective CA’s strength in India indicating the number and addresses of offices, manpower and investment, if any, in the Indian capital market as follows:

         (a)         Commitment to India, indicating net investment In Indian capital market

(b)       The quality and quantity of presence in India with specific reference to research team

(c)        Number and places of offices with address, manpower with the investment banking team.

(vii)      Broad Scheme for the issue

a)         Suggestion of Optimal syndicate structure for maximizing quality and quantity of demand.

            b)            Proposal on syndicate incentivization.

            c)            Strategy for pre-marketing.

d)         Proposed Road Show venues and reasons for suggesting the same.

e)         Commitment(s) which may act either as a constraint or as a conflicting interest to your involvement in the proposed issue

(viii)            Manpower commitment

Details of the team that will be handling the proposed issue, their status in the organization, their background, qualification, experience and present addresses.

(ix)            Marketing and Demand Analysis

Details of the following should be furnished:

a)         Equity sales and distribution capacity with demonstrated capability of selling Indian issues in particular, Asian equity and global equity along with distribution network.

b)         Demand analysis as projected and details of sectors influencing demand.

c)         Strategy for marketing shares and identification of target investor groups.

d)            Identification of key selling points.

(x)            Valuation Methodology

Details of the valuation methodology to be followed in determining the final pricing of the issue, indicating clearly the pricing level proposed to be underwritten.

 (xi)            Quality of Research

              Research strength in the country, sector, region, world based on rating as established by independent global surveys.  Details should be given relating to research capabilities and experience and background of the research team.

(xii)      After-market support

              Strength in lending after market support, with specific reference to Indian issues managed in the past.

(xiii)            Underwriting capabilities

Underwriting capabilities including details of capital base of the Investment Bank available to support such underwriting, record of past underwriting commitments and experience. Also, the details of any of the underwriting commitments (including hard underwriting), which could not be met, may also be furnished.

(xiv)     Time Schedule

A realistic time schedule for launching the proposed Domestic issue with complete break up of activities to be undertaken by various agencies involved in the issue.

4.2       All the information sought above, and any other additional information considered necessary by the bidder, should be sent, in 3 copies, maximum of 10 pages (font size 12) to the officer mentioned in para 4.1 as a part of the Expression of Interest (EOI).

5.            Eligibility

5.1            Bidders should have had handled domestic equity issues in respect of issue size of more than Rs.100 crore in Book Building process.

5.2            Government of India has issued guidelines prescribing certain qualifications for Advisors for disinvestment process. A copy of the guidelines (OM No. 6/4/2001-DD-II dated 13^th July, 2001) is enclosed (Annexure-II). The interested parties are requested to carefully go through the guidelines and after satisfying that they are qualified to act as Joint Coordinator-cum-Advisor, furnish the following certificate as a part of the proposal/EOI.

“We certify that there has been no conviction by a Court of Law or indictment/adverse order by a regulatory authority for a grave offence against us or any of our sister concern. It is further certified that there is no investigation pending against us or our sister concern or the CEO, Directors/Managers/ Employees of our concern or of our sister concern. It is certified that no conflict of interest exists as on date and if in future such a conflict of interest arises we will intimate the Government of India of the same.”

6.            Presentation

6.1            Qualified interested parties would be required to make a presentation of their credentials and the proposed transaction, before an Inter-Ministerial Group (IMG) at New Delhi in the Committee Room of Ministry of Disinvestment, Room No.515, Block No.14, CGO Complex, New Delhi-110003.  The exact date and time of the presentation will be intimated separately. The parties will be assessed broadly on the following criteria:

a)                 Experience and capabilities in handling similar transactions as Advisors/ Coordinators.

b)         Sector expertise and experience.

c) Understanding of the IBP.

d)         Deal team qualification and manpower commitment to the deal.

e) Marketing strategy and after market support.

f )         Local presence and level of commitment to India.

g)         Global presence and distribution capabilities.

h) Research capabilities.

6.2            Immediately after their presentation is over, the parties are required to hand over a sealed envelope containing the fee quotes mentioned in para 7 below to the Chairman of the Inter-Ministerial-Group. The fee quoted should be unconditional and gross of all taxes.

7.         Fee

7.1       The Coordinator-cum-Advisor will need to quote a fee for the domestic issue as a percentage of disinvestment proceeds through domestic offering in a sealed envelope. The fee quoted should be unconditional and gross of all taxes.   A drop-dead fee, payable in case Government abandons at any stage after the process has been started by the Government/Advisors, may also be indicated separately.

7.2       The bid should be unconditional. Expenditure on account of fees to legal/accounting or any other consultant, as well as to printers appointed by GOI, should not be included in the financial bid. Expenses on Road Shows, conferences and travel, boarding and lodging, only of Government/IBP officials will be borne by the Government.  The CA will, however, pay the travel related expenses and all the other expenses including those related to their due diligence, their road show expenses and pre-marketing expenses in connection with the offerings, expenses of legal counsels, accountants and other experts appointed by them for communication and for preparation of offering circular, prospectus, etc. The CA will be liable to pay taxes for their professional services as per laws of the land.

7.3            Government would select two parties and both of them would work as a team.    Both the selected parties would be called Joint Coordinator-cum-Advisor (JCA). The JCAs selected will also have to form a syndicate including co-managers in consultation with Government.  The fee quoted by the selected Coordinator-cum-Advisor shall include provisions for such other Coordinator and syndicate members who would be included, in consultation with Government. The fee to be quoted by the Coordinator-cum-Advisors would be shared equally between the two Coordinator-cum-Advisors so appointed by Government.

8.            Procedure for Selection of the Coordinator-cum-Advisor (CA)

8.1       Based on the Expression of Interest received from the interested parties, Government would request them to make a presentation before an Inter-Ministerial Group (IMG) constituted by the Government.

8.2       The IMG would evaluate the parties based on their presentation and shortlist them for the purpose of opening their financial bids.  The L1 party would be selected for the transaction and the L2 party would be requested to match the fees quoted by L1.  In case L2 does not accept the offer, Government will make the offer to the L3 and the process will continue till Government appoints two CAs. 

8.3       The two CAs selected by Government would work as a team and both the selected CAs would be called Joint Coordinator-cum-Advisors (JCA). The two Joint Coordinator-cum-Advisors (JCAs) would share the aforesaid fees equally.

9.            Clarifications         

9.1       If any further clarification is needed about the assignment, the under-mentioned officer may be contacted.

Shri G. Ramachandran

Deputy Secretary

Ministry of Disinvestment

II Floor, Block No.11

CGO Complex

Lodhi Road

New Delhi - 110 003

Tel. 011-2436 8531

Fax 011-2436 6524

e-mail: dsr@hub.nic.in