The 5% stake sale in Power Finance Corporation (PFC) was subscribed more than 2.34 times on Monday, assuring the government of at least Rs 1,710 crore based on the average bidding price.
Stock exchange data showed that 15.41 crore shares were bid against the issue size of 6.6 crore shares. The sale saw robust demand from retail buyers with bids coming in for 5.92 crore shares, as against 1.32 crore reserved for them.
The portion for retail investors, who also get a 5% price discount, was over-subscribed 4.49 times.
Institutional investors bid for 9.49 crore shares, representing 1.80 times of the 5.28 crore shares on offer. The floor price of Rs 254 a share was at a discount of 2.14% lower than Friday’s closing price of Rs 259.55. Shares of PFC closed at Rs 254.05, down 2.12% over previous close.
Post the offer, the government’s stake will drop to 67.8%. The Centre may sell an additional 3% stake in the state-owned power financing company through the CPSE exchange traded fund (ETF) within 12 weeks of the offer, according to the filing.
SBI Capital Markets and Axis Capital were financial advisors to the government on the PFC disinvestment.
The PFC offer is the first after the rule changes by Securities and Exchange Board of India (Sebi) last month. Capital markets regulator allowed companies to disclose their offer-for-sale (OFS) plans two banking days in advance instead of two trading days before launching an OFS.
PFC’s sale was also the second among state-owned companies where the government pared its stake under the planned disinvestment programme. The government sold 5% stake in Rural Electrification Corp (REC) in April first week and raised Rs 1,612 crore. The offer was subscribed 5.5 times.
For fiscal 2016, the Centre has set a record disinvestment target of Rs 69,500 crore of which Rs 41,000 crore is estimated from stake sale and an additional Rs 28,500 crore from strategic disinvestment.
To achieve this year’s disinvestment target, the government created a pool of 16 companies including the plan announced early July to sell stake in eight state-owned companies and conduct a follow-on offer in CPSE ETF.
In all, the central exchequer has the potential to raise about Rs 45,500-46,000 crore based on the current market price.
The government has lined-up ONGC which may fetch about Rs 13,000 crore on current market rate. Other companies include Indian Oil (Rs 10,200 cr), NTPC (Rs 5,500 cr), NMDC (Rs 4,500 cr), and BHEL (Rs 2,800 cr), data showed.
Previous year, the government had set a target of Rs 63,425 crore but managed to raise only half of the target, data from DoD showed.
Investors lap up govt offer
* 15.41 crore shares were bid against the issue size of 6.6 crore shares
* Retail investors (who get a 5% discount) bid for 5.92 crore shares, as against 1.32 crore reserved. The segment was
* Institutional investors bid for 9.49 crore shares, representing 1.80 times of the 5.28 crore shares on offer
* The floor price of R254 a share was at a discount of 2.14% lower than Friday’s closing price