SAIL OFS over-subscribed 3.6 times on day one; govt to exercise greenshoe option

By: |
Updated: Jan 14, 2021 7:25 PM

The government is selling 20.65 crore shares or 5 per cent of the total equity of Steel Authority of India Limited (SAIL) through the offer for sale (OFS). It has an option to sell an additional 20.65 crore share of SAIL in case of over-subscription. The overall divestment, firm plus greenshoe, will total 10 per cent.

sail ofs over subscriptionThe government is expected to mobilise Rs 1,544 crore at the upper price band of Rs 25-26 per share.

The government’s sale of its 5 per cent shareholding in India’s largest steelmaker SAIL was over-subscribed 3.6 times on the first day of its opening on Thursday.

Enthused by the response, the government decided to exercise the  greenshoe option of another 20.65 crore shares or 5 per cent of the total equity.

“Offer for Sale of Govt shares in SAIL got great response on day one. Issue subscribed 4.14 times of base size at a clearing price above the floor price by non-retail investors. Govt has decided to exercise the green shoe option. Retail investors get chance to bid tomorrow,” DIPAM Secretary Tuhin Kanta Pandey said in a tweet.

Over 74.74 crore shares were sought by non-retail investors at the close of trading hours, stock exchange data showed.

The shares sought were 362 per cent of the overall issue size and nearly 413 per cent of the shares reserved for non-retail investors who were supposed to make bids on the opening day of the offer for sale (OFS).

Of the bids, 37.46 crore put in 100 per cent margin money.

The total OFS size was 20.6 crore shares of face value of Rs 10 each (base offer size), with an option to additionally sell up to 20.6 crore equity shares.

With this, the total OFS goes up to 41.3 crore shares and government is expected to mobilise Rs 2,664 crore at a floor price of Rs 64 per share.

Retail investors can bid on Friday.

Of the 20.65 crore shares on offer, 18.07 crore have been reserved for non-retail investors and 2.58 crore for retail investors.

The indicative price of bids that came in on Thursday was Rs 65.49, exchange data showed. SAIL closed nearly 10 per cent down on the BSE at Rs 67.25.

At least 12.5 per cent of the offer shares will be reserved for allocation to retail investors.

No single bidder other than mutual funds registered with the Securities and Exchange Board of India (Sebi) will be allocated over 25 per cent of the shares on offer, according to the terms of OFS.

A minimum of 25 per cent of shares will be reserved for mutual funds and insurance companies.

The SAIL OFS is part of the government’s disinvestment programme through which it is targeting to raise a record Rs 2.1 lakh crore in the current fiscal ending March 31, 2021.

So far, the government has raised Rs 28,298.26 crore from disinvestment proceeds. This includes Rs 14,453.77 crore received as dividend from state-owned firms. The remaining Rs 13,844.49 crore proceeds include Rs 1,065.37 crore from selling shares in NTPC share buyback.

A Rs 4,600-crore initial public offering (IPO) of the Indian Railway Finance Corporation (IRFC), a public sector undertaking under the railways ministry, will open on January 18. The IPO comprises up to 178.2 crore shares of face value of Rs 10 each.

The government is expected to mobilise Rs 1,544 crore at the upper price band of Rs 25-26 per share.

The government is most likely to miss its disinvestment target by a wide margin and the fiscal deficit is not likely to be anywhere near the target of 3.5 per cent of the GDP in 2020-21 (April 2020 to March 2021).

While privatisation of firms such as Bharat Petroleum Corporation Ltd (BPCL) and Air India has been pushed to the next fiscal due to COVID-19-related delays, tax collections have been hit hard as restrictions imposed to curb coronavirus dented incomes all around.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1IPO Watch: Indigo Paints issue subscribed 1.9 times so far; Home First Finance offer opens today
2Government to get Rs 1,544 crore from IRFC IPO
3Indigo Paints IPO subscribed 1.90 times on first day