REC FPO subscribed over 3 times, retailers skip

The follow-on share sale of Rural Electrification Corporation (REC) got subscribed 3.10 times till 1600 hrs on the final day of the issue today, primarily on demand from institutional investors as retail investors showed muted response to the issue due to lack of discount.

The issue received bids for 53.26 crore shares, against 17.17 crore shares on offer, resulting in a demand of 3.10 times till 1600 hrs, as per the NSE data.

Market sources said domestic FIIs like LIC, UTI and SBI submitted their bids for the follow-on-public offer (FPO) on the final day with LIC estimated to have placed a demand for share worth Rs 800-1,000 crore.

The portion reserved for qualified institutional buyers was subscribed 4.15 times, while HNIs and retail demand remained tepid at 74 per cent and 12 per cent, respectively.

"Retail investors have not participated in the FPO as their is no discount for them. Besides, uncertain secondary market conditions and absence of substantial discount from market price kept retail demand muted," SMC Capitals equity head Jagannadham Thunuguntla said.

While majority (over 23 crore) of the bid came in at Rs 205 a share, over 16 crore bid came in at Rs 206 a share and 6.38 crore at the floor price of Rs 203.

"FIIs have put in Rs 2,300 crore worth demand and we are expecting another Rs 1,200 crore," a company official said.

Market sources said a host of foreign funds such as JP Morgan, and JF Capital Partners among others have put in their bids today.