EIL share sale fully subscribed, government to get Rs 500 cr

The share sale saw a lukewarm response yesterday, gained traction today as bids from institutional buyers came in

The government’s 10 per cent share sale in Engineers India Limited (EIL) through a follow-on public offer was fully subscribed on the second day, and is set to fetch the exchequer about Rs 500 crore.

Bids were received for over 39.7 million shares, or 1.18 times the 33.6 million shares on offer, as of 5 pm on Friday. The portion reserved for qualified institutional investors was oversubscribed 2.6 times.

The shares are being offered at a price band of Rs 145-150 apiece and the issue closes on Monday. The sale could fetch about Rs 500 crore at the upper end of the price band.     

EIL shares closed at Rs 152.25 on the BSE, up 0.6 per cent, after touching an intra-day high of Rs 153.50.     

The government holds 80.4 per cent in the miniratna public sector undertaking and had divested a 10 per cent stake in the company in 2010.

In January last year, the government decided to go in for further disinvestment in EIL, a provider of design, engineering and project management and consultancy services for the hydrocarbon sector.

Chairman and Managing Director A K Purwaha had said the company is eyeing business expansion in Africa and Latin America. Its had an order book of Rs 3,232 crore as of September 2013.     

EIL said a discount of Rs 6 a share will be offered to retail investors and employees. The government has reserved 5 per cent of the offer for employees.

The Department of Disinvestment had held overseas roadshows to attract foreign investors to the stake sale, which is being managed by ICICI Securities, IDFC and Kotak Mahindra Capital, Edelweiss Financial Services and IDBI Capital.     

This is the second disinvestment through a follow-on offer in the current financial year. In December, the government sold 4 per cent in Power Grid Corporation of India, which fetched the exchequer over Rs 1,600 crore.

The government has raised about Rs 3,000 crore of its disinvestment target of Rs 40,000 crore for the current financial year.