BHEL withdraws plans for follow-on offer

State-owned BHEL on Tuesday said it has withdrawn the initial papers for the follow-on offer filed with Securities and Exchange Board of India (SEBI), following an instruction by the Finance Ministry.

"We received instructions from the Department of Disinvestment that the DRHP (draft red herring prospectus) has to be withdrawn...," CMD BHEL B P Rao said while announcing the company's annual results.

The company did not give details about the decision.

However, analysts feel that the move may have been influenced by the lack of enthusiasm among investors for PSU shares.

Rao said as long as DRHP was with the Sebi, the company had to observe a 'silence period'.

The decision follows approval from Board of Directors of the company and "no-objection" from the Department of Heavy Industry and Department of Disinvestment, he said.

The company filed the DRHP in September last year for the follow-on public offer that will see the government offloading 5 per cent stake in the company.

The sale of government's five per cent stake in the power equipment maker is expected to fetch over Rs 4,000 crore.

The government in July, 2011 appointed four merchant bankers - Morgan Stanley, DSP Merrill Lynch (Bank of America), ICICI Securities and Kotak Mahindra Capital - for BHEL's follow-on public offer.

The government on August 30, 2011 approved the disinvestment of 5 per cent of its shareholding in BHEL.

The government holds 67.72 per cent stake in the entity.