PFC stake sale subscribed 36 pc in initial hour of trade

The government's 5 per cent stake sale in power sector lender PFC kicked off today with the issue getting subscribed 36 per cent in the initial hour of trade.
The government is looking to raise over Rs 1,600 crore from sale of 6.60 crore shares in Power Finance Corp (PFC) through a one-day OFS route at a floor price of Rs 254 apiece.
PFC is the second PSU to be divested in the current fiscal under the government's disinvestment programme. In April, government had sold 5 per cent stake in REC to garner Rs 1,550 crore.
The share sale, which began at 0915 hours, received good response from institutional investors and portion reserved for them was subscribed 42 per cent by 1025 hrs.

The portion reserved for retail investors, who are also getting 5 per cent price discount, was subscribed 11 per cent, as per the stock exchange data.
Overall, the Offer was subscribed 36 per cent and the subscription may rise further during the day as bidding will continue till 1530 hrs.

As against a floor price of Rs 254 a share for the OFS, PFC shares were trading at Rs 257.70. The current market price was, however, down 0.71 per cent over previous close on BSE.
The floor price of Rs 254 a share was at a discount of 2.14 per cent over Friday's closing price of Rs 259.55.

At the floor price, the government is expected to mobilise around Rs 1,676 crore through the divestment.
At present, government holds 72.80 per cent equity in Power Finance Corporation. After sale of 6.60 crore shares representing 5 per cent stake on offer, government's holding will be reduced to 67.80 per cent.
PFC is the first disinvestment under the modified OFS rules of Sebi under which companies are allowed to disclose stake sale plans two 'banking' days ahead of the issue.
The Department of Disinvestment had approached Sebi in March saying they do not want trading days in-between the announcement and stake sale.

Earlier, the companies were required to give an advance notice of two trading days before the OFS, which the government says gave scope for speculators to beat down the share price of the disinvestment-bound PSU.
The Department has a Rs 69,500-crore target from PSU disinvestment in the current fiscal, of which Rs 41,000 crore would come from minority stake sale and Rs 28,500 crore from strategic stake sale.
As much as 20 per cent of the issue size is reserved for retail investors and 25 per cent for mutual funds and domestic insurance companies.
The remaining portion is left for institutional investors, which are usually lapped up mostly by domestic financial institutions and foreign funds.