NMDC FPO sails through; FIIs, retail stay away

Domestic financial institutions helped mining firm NMDC’s follow-on public offer (FPO) sail through on the final day with a marginal over-subscription despite poor response from foreign institutional investors (FIIs), retail and high net worth individuals.

According to data available on National Stock Exchange (NSE) website, the issue was subscribed 1.25 times with bids for 413.79 million shares against 332.24 million shares on offer in Rs 300 to Rs 350 price band. Most of the bids were received at the lower end of the band.

The qualified institutional buyers (QIBs) portion of the issue was subscribed 2.28 times with FIIs accounting for a minor share of 8.34 million shares. Most FIIs chose to stay away from an offering that has been criticised for being over-priced.

Domestic institutions led by Life Insurance Corporation (LIC) and other state-owned institutions bid for 363.33 million shares. The high net worth individual and retail portions were under-subscribed.
 

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Category	No. of times  subscribed
QIB	2.28
HNI	0.22
Retail	0.21
Total	1.25
Source: NSE

Market sources said LIC and State Bank of India (SBI) accounted for the bulk of the institutional bidding. LIC has reportedly put in bids worth nearly Rs 7,000 crore, accounting for over 70 per cent of the issue. SBI is believed to have put in bids in excess of Rs 700 crore.

“I am more than relieved with the response. However, I would have been happier if the issue had been subscribed two or three times but looking at the situation we were in, I think we did fairly well,” NMDC’s Chairman and Managing Director Rana Som told Business Standard.

“The NMDC issue did much better that NTPC and REC as investors realised it is a long-term investment call,” added S Thiagarajan, director (finance).

Since the bulk of the bids were at the lower end of the price band, the government expects to mobilise less than the Rs 10,000 crore it had targeted from the FPO that will reduce its stake in the miner from 98 to 90 per cent.

The final offer price will be decided in consultation with the government in the next few days.

The NMDC FPO ends the government's disinvestment programme for the current financial year. The government has already raised Rs 13,621 crore this fiscal through the disinvestment in four companies — NTPC, REC, Oil India and NHPC.

The NMDC scrip has been falling ever since the FPO price band was announced on Monday and it lost marginal ground on Friday, closing at Rs 360.40, down 0.22 per cent on the NSE.