NFL issue subscribed 24% in early trade, stock tanks 5%

Shares of National Fertilisers Ltd (NFL) tanked over 5% in the morning trade as government's disinvestment began on the bourses.

Within one hour of the issue being launched on the bourses, it attracted bids of 90 lakh or 24% of the total 3.74 crore shares on offer. The bids came in at an indicative price of Rs 27 apiece.

Shares of NFL touched a low of Rs 25.25 apiece, down 5.43% over the previous close of Rs 26.70 on the BSE.

The government, which is selling 3.74 crore shares in NFL, had fixed the base price for the issue at Rs 27 apiece, which was lower than the prevailing market price.

Government holds 97.64% stake in the company and disinvestment is being done to make it compliant with Sebi norms.

The disinvestment of 7.64% stake, or 3.74 crore shares through the offer for sale (OFS) at a base price of Rs 27 apiece would fetch the exchequer Rs 101 crore.

IDBI Capital Markets is acting as merchant banker for the share sale.

As per Sebi norms, a public sector listed company should have a minimum of 10% public float by August 8, 2013.

The paid-up equity capital of the company, as on March 31, 2012, was Rs 490.58 crore.

The government proposes to raise Rs 40,000 crore by way of disinvestment in the current fiscal. So far in the current fiscal, it has raised over Rs 800 crore.