The share sale of Hindustan Copper, which was the first disinvestment for this fiscal, managed to sail through today mainly on support from the Life Insurance Corporation and public sector banks. The offer for sale (OFS) saw subdued response from large foreign institutional investors and private domestic investors like mutual funds.
Thanks to the state-owned institutions, the disinvestment has yielded Rs 800 crore, which is a much-needed amount as prior to this nothing has come from the stake sale of public sector units, pegged at Rs 30,000 crore for 2012-13.
The shares were bought at an average price of Rs 156.83 apiece against the government’s floor price of Rs 155. The government offloaded 4% stake in Hindustan Copper out of the 99.59% that it held in the company. The offer was at a steep discount of 41% to the stock price on Thursday of Rs 266.
The tepid demand to the issue from a larger section of institutional investors despite the cheaper pricing has baffled government and bankers who were expecting that the issue would be lapped up.
But Finance Minister P Chidambarm told reporters that "Hindustan Copper shows resumption of the divestment process and I'm happy that the issue got fully subscribed."
Life Insurance Corporation, State Bank of India and Punjab National Bank were among the top investors. Hindustan Copper was struggling to attract investors initially as bids worth only Rs 31 crore were received in the first three hours. It was the last 30 minutes that saw majority of bids leading to the issue being fully subscribed, said brokers involved with process.
A minimum of four per cent stake (3,70,08,720 shares) was offered for sale with an option to sell an additional 5.59 per cent (5,17,14,580 shares). However, in total bids for 5,16,11,858 shares were received.
"It has been decided to accept the entire number of shares bid for at or above the floor price," an official statement said.
The government had earlier softened its stand on pricing the Hindustan Copper issue after the Oil and Natural Gas Corporation share sale had to be rescued by public-sector insurance companies because of lack of interest from other investors.
The shares of Hindustan Copper today fell by 20% and closed at Rs 213 as the market was disappointed over the OFS price.
Independent equity advisor S P Tulsian said that the issue was bailed out by public sector banks and insurance companies. The sentiment would have been better had a few FIIs shown some interest or even the average sale price was higher.
The government, which is intends to raise Rs 30,000 crore through divestment this financial year, is planning share sale in MMTC Ltd, National Aluminium Company Ltd Oil India Ltd, NTPC Ltd and NMDC before March 2013.
Blue Dart OFS oversubscribed
Blue Dart Express OFS managed to garner bids for over 5.18 million shares against the offer of 1.43 million shares. Blue Dart Express' offer-for-sale floor price was set at Rs 1,720 a share a discount of 16% to yesterday’s closing price, for sale of 6.03 percent stake in its subsidiary Blue Dart Express. DHL Express (Singapore) Pte Ltd, promoter of Blue Dart Express offered the shares to meet market regulator SEBI's minimum public share holding criteria of 25%. The stock closed 3.09% or Rs 63.45 lower at Rs 1,993.15 on the BSE. The stake sale could fetch the company at least Rs 246.29 crore.