The Modi government intends to sell its rump stake in Hindustan Zinc in a number of tranches as it looks to monetise a lucrative asset that was disinvested during Vajpayee’s regime in 2003. The Centre’s 29.5 per cent holding is valued at Rs 32,000 crore.

In 2002, Vedanta (earlier known as Sesa Sterlite) bought a 26 per cent stake in HZL, India’s largest zinc/lead miner, for Rs 445 crore. It exercised the first call option in 2003 and acquired an 18.9 per cent additional stake in HZL.

Vedanta later acquired another 20 per cent in the company through an open offer, increasing its shareholding to 64.92 per cent. Officials said they are mulling the option of selling the residual stake in tranches rather than in one go, but the final decision would be based on roadshows, investor interest and market conditions.

The officials said initial indications are that if the stakes are sold at one go, the government may not get maximum value for its stake, but if sold in tranches, it could garner a higher sum.

They said these are preliminary inputs received from the merchant bankers and a stake sale strategy would be worked out later after an evaluation of the market’s capacity to respond to the OFS.

They did not indicate whether the entire stake will be offloaded in the current financial year or if in tranches and by how much. After appointing five merchant bankers for the stake sale, it has now begun the process of appointing a legal adviser for the transactions.

The Department of Investment and Public Asset Management (DIPAM) has appointed five bankers — ICICI Securities, Axis Capital, Citi Group, HDFC Bank and IIFL Securities — to advise on the timing and management of the HZL stake sale. It has invited applications from legal firms, which can submit proposals by September 16, to select an adviser for the transactions.