Hindustan Copper share sale raises 8.1 billion rupees

India raised 8.1 billion rupees by selling of state-run Ltd. on Friday, kick-starting a stalled divestment programme that is crucial to reining in a ballooning fiscal deficit.

The success of the auction, the first share by New in eight months, is expected to boost prospects for other state asset sales, although the deal was supported by buying from state institutions.

New aims to raise 300 billion rupees by selling in state in the fiscal year ending in March. Excluding the latest sale, it has managed just 1.25 billion rupees so far.

Weak market conditions, corruption scandals and wrangling among government officials have delayed several planned offerings.

"The fact that they are pushing this forward is a positive sign," said Sam Mahtani, a London-based fund manager at F&C Asset Management, which owns Indian worth $350 million.

"Obviously they do need the funds to tackle the fiscal deficit," he said.

India may end the year with a fiscal deficit of 5.6 percent of gross domestic product, above an official target of 5.3 percent, a top government official said on Thursday.

That would make it tougher for New to avoid a credit rating downgrade.

The auction of India's third-largest producer drew bids for 51.6 million shares, stock exchange data showed, representing 5.6 percent of its share capital.

New offered 37.01 million shares, or 4 percent of the company, but had the option to sell a further 51.71 million. The government is likely to exercise the overallotment option and allocate all for which it received bids, two sources with direct knowledge of the matter said.

INFLATED PRICE

The bids had a weighted average price of 156.56 rupees a share, exchange data showed, slightly above the 155 rupees floor price.

The government owns 99.59 percent of Copper, and the limited free float had inflated the traded price of the shares. The stock fell about 20 percent, its daily limit, on Friday to 212.95 rupees.

Mumbai-based Angel Broking had advised investors to avoid buying in the auction due to a high valuation.

At the floor price, the stock's enterprise value is equivalent to 24.5 times the company's earnings before interest, tax, depreciation and amortisation, compared to five to 10 times at peers Coal India and , it said.

State-run Life Corp of India and State were among the bigger buyers of shares, the sources said, an indication of muted interest from private sector investors.

The government has lined up sales in miner Ltd and explorer Oil India before December 20, a government official said this week.

Axis Capital, ICICI Securities, Kotak Securities, Capital and UBS were the lead managers for the sale.

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Business Standard

Hindustan Copper share sale raises 8.1 billion rupees

Reuters  |  Mumbai 

India raised 8.1 billion rupees by selling of state-run Ltd. on Friday, kick-starting a stalled divestment programme that is crucial to reining in a ballooning fiscal deficit.

The success of the auction, the first share by New in eight months, is expected to boost prospects for other state asset sales, although the deal was supported by buying from state institutions.

New aims to raise 300 billion rupees by selling in state in the fiscal year ending in March. Excluding the latest sale, it has managed just 1.25 billion rupees so far.

Weak market conditions, corruption scandals and wrangling among government officials have delayed several planned offerings.

"The fact that they are pushing this forward is a positive sign," said Sam Mahtani, a London-based fund manager at F&C Asset Management, which owns Indian worth $350 million.

"Obviously they do need the funds to tackle the fiscal deficit," he said.

India may end the year with a fiscal deficit of 5.6 percent of gross domestic product, above an official target of 5.3 percent, a top government official said on Thursday.

That would make it tougher for New to avoid a credit rating downgrade.

The auction of India's third-largest producer drew bids for 51.6 million shares, stock exchange data showed, representing 5.6 percent of its share capital.

New offered 37.01 million shares, or 4 percent of the company, but had the option to sell a further 51.71 million. The government is likely to exercise the overallotment option and allocate all for which it received bids, two sources with direct knowledge of the matter said.

INFLATED PRICE

The bids had a weighted average price of 156.56 rupees a share, exchange data showed, slightly above the 155 rupees floor price.

The government owns 99.59 percent of Copper, and the limited free float had inflated the traded price of the shares. The stock fell about 20 percent, its daily limit, on Friday to 212.95 rupees.

Mumbai-based Angel Broking had advised investors to avoid buying in the auction due to a high valuation.

At the floor price, the stock's enterprise value is equivalent to 24.5 times the company's earnings before interest, tax, depreciation and amortisation, compared to five to 10 times at peers Coal India and , it said.

State-run Life Corp of India and State were among the bigger buyers of shares, the sources said, an indication of muted interest from private sector investors.

The government has lined up sales in miner Ltd and explorer Oil India before December 20, a government official said this week.

Axis Capital, ICICI Securities, Kotak Securities, Capital and UBS were the lead managers for the sale.

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Hindustan Copper share sale raises 8.1 billion rupees

India raised 8.1 billion rupees by selling shares of state-run Hindustan Copper Ltd. on Friday, kick-starting a stalled divestment programme that is crucial to reining in a ballooning fiscal deficit.

India raised 8.1 billion rupees by selling of state-run Ltd. on Friday, kick-starting a stalled divestment programme that is crucial to reining in a ballooning fiscal deficit.

The success of the auction, the first share by New in eight months, is expected to boost prospects for other state asset sales, although the deal was supported by buying from state institutions.

New aims to raise 300 billion rupees by selling in state in the fiscal year ending in March. Excluding the latest sale, it has managed just 1.25 billion rupees so far.

Weak market conditions, corruption scandals and wrangling among government officials have delayed several planned offerings.

"The fact that they are pushing this forward is a positive sign," said Sam Mahtani, a London-based fund manager at F&C Asset Management, which owns Indian worth $350 million.

"Obviously they do need the funds to tackle the fiscal deficit," he said.

India may end the year with a fiscal deficit of 5.6 percent of gross domestic product, above an official target of 5.3 percent, a top government official said on Thursday.

That would make it tougher for New to avoid a credit rating downgrade.

The auction of India's third-largest producer drew bids for 51.6 million shares, stock exchange data showed, representing 5.6 percent of its share capital.

New offered 37.01 million shares, or 4 percent of the company, but had the option to sell a further 51.71 million. The government is likely to exercise the overallotment option and allocate all for which it received bids, two sources with direct knowledge of the matter said.

INFLATED PRICE

The bids had a weighted average price of 156.56 rupees a share, exchange data showed, slightly above the 155 rupees floor price.

The government owns 99.59 percent of Copper, and the limited free float had inflated the traded price of the shares. The stock fell about 20 percent, its daily limit, on Friday to 212.95 rupees.

Mumbai-based Angel Broking had advised investors to avoid buying in the auction due to a high valuation.

At the floor price, the stock's enterprise value is equivalent to 24.5 times the company's earnings before interest, tax, depreciation and amortisation, compared to five to 10 times at peers Coal India and , it said.

State-run Life Corp of India and State were among the bigger buyers of shares, the sources said, an indication of muted interest from private sector investors.

The government has lined up sales in miner Ltd and explorer Oil India before December 20, a government official said this week.

Axis Capital, ICICI Securities, Kotak Securities, Capital and UBS were the lead managers for the sale.

image
Business Standard
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