The offer for sale of shares for MOIL Ltd, which opened today for retail investors, was oversubscribed by about 51% by the institutional investors in that category at the end of bidding yesterday.
The state-run miner received bids for 16,079,086 shares on Tuesday from institutional bidders out of 10,655,024 shares on offer. The indicative price at the end of the day at Rs 365.26 was very close to the floor price of Rs 365.
The issue opens for retail investors today with 20% percent reserved for them.
The government is selling 10% equity stake in the manganese miner MOIL Ltd at a floor price of Rs 365 a share, in a bid to raise about Rs 450 crore for the exchequer and to further help it raise money through disinvestment of equity stakes in PSUs (public sector undertakings).
The floor price is at a discount of 4.63% over Monday’s closing price of MOIL at Rs 382.70 on the BSE. Retail investors will get a further discount of 5.2% in the offer for sale. The government currently holds 75.58% in MOIL.
MOIL shares fell further from yesterday and were trading at Rs 358.55, down 2.59%.
Earlier, the government had earned about Rs 794 crore through a share buyback in which MOIL bought shares back from the government – its largest stakeholder.
Earlier this month, Disinvestment Secretary Neeraj Kumar Gupta said that the government aims to “soon” kickstart the process of strategic sale of equity stakes in public sector undertakings to meet its disinvestment revenue target for the current financial year. The government has created a pipeline for strategic stake sale, Gupta had said.
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Disinvestment to raise funds
Indian government has undertaken strategic sale of stake in profitable PSUs to help boost up state revenue and bridge the fiscal deficit, but has repeatedly fallen short of its disinvestment targets in the past. It has a target to earn Rs 56,500 crore by divesting its stake in public sector undertakings in the current financial year 2016-17, and has already garnered about Rs 30,000 crore so far this fiscal through share sale and share buyback by the companies.
Manish Singh, Joint Secretary in Department of Investment and Public Asset Management (DIPAM) under Ministry of Finance, said earlier this month that the government is confident of achieving the remaining amount in the next two-and-a-half months. He added that the government has all the options open including strategic share sale, minority disinvestment and further stake sale.
The Cabinet Committee on Economic Affairs had in October given in-principle approval for strategic stake sale in central public sector enterprises (CPSEs), facilitating the government’s agenda and helping it take measures to meet its revenue targets for the year. The approval was based on the recommendations of the Core Group of Secretaries on Disinvestment.
The immediate candidates lined up for disinvestment include the state-run helicopter services company Pawan Hans Ltd and the CPSE ETF (exchange traded fund).