Govt raises Rs 630 cr from Nalco share sale

Nalco OFS received a total of 156.9 million bids at a weighted average price of Rs 40.05

The government on Friday raised about Rs 630 crore by divesting its holding in aluminum manufacturer National Aluminum Company (Nalco), taking it close to the downward revised disinvestment target of Rs 24,000-crore for 2012-13.

The Nalco offer for sale (OFS), the sixth government share auction this financial year, received 156.9 million bids at a weighted average price of Rs 40.05, stock exchange data showed.

The government had put on the block 128.8 million shares, or five per cent stake. There was an option of selling another five per cent in case of over-subscription. Though the auction was subscribed 1.2 times, on an overall basis, the demand was for just 60 per cent of the total shares available.

A government official said he was disappointed by the response. A merchant banker handling the issue said there wasn’t much demand from foreign investors, given the weak sentiment towards the metal sector.

The shares of Nalco closed at Rs 40.35, down Rs 3.90 or 8.8 per cent on the Bombay Stock Exchange. At on Friday’s close the company’s market capitalisation was Rs 10,400 crore.

After the auction, the government holding in Nalco will come down from 87.15 per cent to 81 per cent. Axis Capital, IDFC Securities and SBICAP Securities were managing the auction.

Nalco is the country’s third-largest producer of aluminium. The company operates an alumina refinery, smelter plant and bauxite mines in Odisha. It has annual bauxite mining capacity of 6.8 million tonnes and aluminia refining capacity of 2.28 mt.

Nalco share auction was part of the disinvestment programme to rein in the 2012-13 fiscal deficit to 5.2 per cent. Earlier this month, the government had conducted share sale in Rashtriya Chemicals and Fertilizers and had divested in NTPC and Oil India last month.

So far, the government has raised about Rs 22,430 crore by divesting in seven companies. The government in February had scaled down the disinvestment target from Rs 30,000 to Rs 24,000 crore.

The government is likely to take a decision on share sales of SAIL and MMTC next week.