The Union government Friday got a little over Rs 3,000 crore by divesting a 10 per cent stake in Oil India Ltd (OIL), taking this year’s disinvestment kittty to a little over Rs 10,000 crore.
It sold about 60 million shares in the petroleum exploration navratna at Rs 520 each through the Offer For Sale (OFS) route, to raise Rs 3,100 crore. The issue attracted bids for 154 million shares, about 2.5 times the shares on offer. The good response gives the government a needed boost as it plans to launch the NTPC mega offer next week.
The issue attracted demand from a broad category, including foreign institutional investors (FIIs) and retail investors. An investment banker handling the issue said FIIs invested a little over $500 million (Rs 2,700 crore), while state-owned Life Insurance Corporation invested about Rs 1,000 crore.
OIL’s shares closed at Rs 525.55, down Rs 13.65 or 2.5 per cent from yesterday. The benchmark Sensex ended Friday at 19,781.19, down 113.79 points or 0.6 per cent.
The government so far has raised a little over Rs 10,000 cr through disinvestment in FY13
|Source: NSE, BSE;
Note: Figures in Rs cr
The government set the floor price for the share sale at Rs 510, a five per cent discount to yesterday’s closing price. Most brokerages had advised clients to participate.
Another investment banker said as OIL isn’t present in the futures and options segment, most of the participation came from genuine and long-term investors.
This was the first issue to hit the market after the Securities and Exchange Board of India simplified the OFS rules by allowing institutional investors to bid without an upfront payment. An almost equal amount of bids came through the 100 per cent margin route and the new route with no margin requirement. Investors bidding without any upfront payment are not allowed to modify or cancel bids and their trades settlement happens a day later.
With Friday’s share sale, the government has raised a little over Rs 10,000 crore by selling holdings in four companies—Oil India, NMDC, Hindustan Copper and National Buildings Construction Corporation— during 2012-13. The Centre has so far achieved only a third of the Rs 30,000-crore divestment target set for this financial year.
The government intends to sell nearly 10 per cent in NTPC on Tuesday, expecting to get about Rs 12,000 crore. The success of the divestment programme is needed to contain the fiscal deficit. The government has identified others for divestment before March 31 — Steel Authority of India, Minerals and Metals Trading Corporation, Neyveli Lignite and Rashtriya Chemicals & Fertilizers.