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Investors on Monday lapped up Power Finance Corporation (PFC)’s offer for sale (OFS) issue, helping the government complete a five per cent divestment stake-sale in the company. The PFC OFS was subscribed 2.3 times on a day when the markets slid by two per cent.
The issue garnered Rs 1,676 crore and saw good response from both the retail and institutional investors. According to data from the exchanges, the issue received bids for 154 million shares, against the 66 million shares that were on offer. The NSE Nifty shed 160 points, or 1.9 per cent, to close at 8,361 on Monday.
Following the five per cent stake sale, the government’s shareholding in the company has now come down to 67.8 per cent. The retail portion was over-subscribed 4.49 times, while the non-retail portion was subscribed by 1.8 times. Disinvestment secretary Aradhana Johri said at a press conference in Delhi on Monday that the issue had seen good retail participation. ““Today Nifty showed its steepest fall since 2011 and there was an Asian market collapse and China market too collapsed considerably... Despite that we managed to have a successful offering. We got bids worth Rs 3,747 crore.”
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This is the first divestment issue by the government after the capital market regulator, Securities and Exchange Board of India, cleared the new OFS norms, whereby companies are allowed to announce stake-sales two ‘banking’ days prior to the issue. OFS norms were revised on the government’s request, which did not want any trading days between the announcement and the stake-sale day to prevent volatile movements in the stock.
This is the first divestment issue by the government after the capital market regulator, Securities and Exchange Board of India, cleared the new OFS norms, whereby companies are allowed to announce stake-sales two ‘banking’ days prior to the issue. OFS norms were revised on the government’s request, which did not want any trading days between the announcement and the stake-sale day to prevent volatile movements in the stock.
This is the second OFS offering from the government’s divestment stable this financial year, Rural Electrification Corporation being the first. The government has a divestment target of Rs 69,500 crore for FY16, including the Rs 28,500-crore strategic stake sale. The REC OFS, which hit the market in April this year, raised about Rs 1,500 crore.
The PFC OFS issue was offered at a floor price of Rs 254 a share. On Monday, the PFC scrip closed down 2.7 per cent at Rs 252.55 a share.
