Wipro share auction under-subscribed

The auction of 3.5 crore Wipro shares by Azim Premji Trust today was under-subscribed with bids coming for only 71% of shares on offer at close of bidding hours.

The floor price for the sale has been set at Rs 418 per share, which is at a discount of about 2% to today's closing price of Rs 425.40.

This is the first sale through the auction route by a private company. The same method was followed during the sale of 5% stake in state-run ONGC on March 1.

According to latest data available with the bourses, the offer for sale of Wipro shares saw bids for 2.47 crore shares as against 3.5 crore scrips on offer.

Based on the minimum bidding price, the sale of 2.47 crore shares would fetch at least Rs 1,034 crore. "Both ONGC and Wipro are blue-chip companies and if they saw muted response in their share auction, this is a wake up call for the promoters of other private sector companies," SMC Global Strategist and Head of Research Jagannadham Thunuguntla said.

People have to be more liberal if they want to see good response in terms of the floor price and if they can come out with open auction method investor interest would become better, he added.

The ONGC offer for sale was completed using the secondary market mechanism created by NSE and BSE. The final demand was for 42.04 crore shares against an offer of 42.77 crore shares.

Meanwhile, Azim Premji Trust on Monday said it plans to utilise the proceeds from the share sale for scaling up the activities of Azimji Premji Foundation. The endowment supporting the foundation is held by the trust.

Azim Premji Trust held 8.66%, or 213 million shares, in Wipro at the end of 2011 December quarter, as per the BSE data.

The brokers for the proposed sale of 35 million shares were Citigroup Global Markets India Pvt Ltd, Morgan Stanley India Company Pvt Ltd, UBS Securities India Pvt Ltd and Credit Suisse Securities (India) Pvt Ltd, a BSE filing by Wipro had said.