Ipcl Open Offer Oversubscribed
The open offer by Reliance Industries for 20 per cent of the outstanding shares of Indian Petrochemicals Corporation (IPCL) has been oversubscribed almost two times. Out of the nearly 40 per cent floating stock, 38 per cent has been tendered in the open offer, merchant banking sources said.
Merchant bankers said the enthusiastic response was quite understandable given that the IPCL stock has ruled at a discount to the Rs 231 open offer price ever since July 24, when the offer opened to the public. The stock was at Rs 154 on July 24 and has only slipped since, reaching its lowest point in this month today, at Rs 131.40. At this price, its is around 44 per cent lower than the open offer price of Rs 231 per share.
Merchant banking sources said Reliance was under no legal compulsion to acquire all the shares tendered in the open offer. Indeed, "given the ruling market price which is at a substantial discount to the open offer price, it is unlikely that Reliance would want to acquire any more than the mandatory 20 per cent," merchant banking sources said.
Reliance had emerged as the successful bidder for the government's 26 per cent stake in IPCL with the company having put in a bid of Rs 231 per share, resulting in a outgo of Rs 1491 crore on this account.
The mandatory open was also made at the same price which would see a payout of Rs 1,147 crore, taking the total cost of acquisition to about Rs 2,638 crore. ICICI Securities was the merchant banker appointed to manage the open offer.
The original transaction value of Rs 1,491 crore was the highest amount received so far in the public sector divestment programme initiated by the government, more than the Rs 1,439 crore received by the government from the Tatas for VSNL.
Pre -sell off the government held a 59.95 per cent stake in IPCL's equity capital of Rs 249 crore while mutual funds and UTI together held around a 9.83 per cent stake. Banks, financial institions and risk firms together held 7.01 per cent with the public float of the company being around 21.59 per cent.
The Reliance open offer was made through its special purpose vehicle Reliance Petroinvestments. With the open offer now being successfully completed, Reliance Industries will be the largest shareholder having an equity holding of 46 per cent while the government's stake would stand reduced to 33.95 per cent. The balance including the public holding would stand reduced to just around 20.05 per cent.