The British government has said it could take a stake of up to 25 percent in Tata’s UK steel plants.
They are up for sale amid an industry crisis – with soaring costs, weak demand and a glut of cheap Chinese imports.
The part nationalisation would be one element in a package of hundreds of millions of pounds of financing to support a potential buyer.
To avoid breaking EU state aid rules, London said any investment would be on commercial terms.
It would prefer to provide debt financing, but taking an equity stake is also an option.
Prime Minister David Cameron is under pressure from trade unions and the opposition Labour Party to ensure that a buyer is found to save the more than 10,000 jobs at risk.
“If we were to take an equity stake it would be a minority one with the aim of supporting the purchaser in delivering long term future for the business. We are certainly not seeking to be controlling the company,” Cameron’s spokeswoman said.
She said the government did not view this as part-nationalisation as it would be investing on a commercial basis and wasn’t seeking control over the business: “We don’t think that nationalisation is the right answer.”
Sanjeev Gupta, the boss of metals trader Liberty House Group, has expressed an interest in Tata’s UK assets, while senior staff at Tata’s loss-making Port Talbot site in Wales, Britain’s biggest steel works, are seeking to launch a management buyout plan.