Govt gets Rs 800 cr, even as most FIIs, MFs stay away despite 41% discount

The Hindustan Copper stake sale , the first disinvestment this financial year, managed to sail through today, mainly on support from Life Insurance Corporation ( LIC ) and public sector banks . The offer for sale ( OFS ) saw subdued response from large foreign institutional investors and private domestic investors like mutual funds.

Thanks to the state-owned institutions, the first tranche of the Hindustan Copper stake sale yielded Rs 800 crore. A decision on the timing of the second tranche is likely on Monday.

ceasefire
The shares were bought at an average price of Rs 156.56 apiece, against the government’s floor price of Rs 155. The government offloaded 5.58 per cent of its 99.59 per cent stake in the firm. The offer was at a steep 41 per cent discount to yesterday’s stock price.

DISINVESTMENT DIARY

Rs 30,000 crore
Government’s disinvestment target for 2012-13
Rs 800 crore
Proceeds from today’s sale of Hind Copper stake
Rs 155
Government’s floor price for the Hind Copper offer for sale
Rs 156.56
Average per-unit price at which shares were bought
99.59%
Government’s holding in Hind Copper before disinvestment
9.59%
Total holding planned to be offered for sale
5.58%
Offloaded today, against day’s minimum target of 4%

The tepid demand from a larger section of institutional investors, despite cheaper pricing, baffled the government and bankers, who were expecting the issue to be lapped up.

Finance Minister P Chidambaram , however, said in New Delhi: “Hindustan Copper shows resumption of the divestment process and I’m happy it got fully subscribed.”

LIC, State Bank of India and Punjab National Bank were among the top investors. Hind Copper initially struggled to attract investors, and only Rs 31-crore bids were received in the first three hours. The last 30 minutes saw the bulk of the bids, leading to the issue being fully subscribed, said brokers involved with the process.

A minimum of four per cent stake (37,008,720 shares) was offered for sale with an option to sell 5.59 per cent (51,714,580 shares) more. But, bids were received for 51,611,858 shares.

“It was decided to accept the entire number of shares bid for at or above floor price,” an official statement said.

Disinvestment Secretary Mohammad Haleem Khan termed the exercise a success, given the weak markets. He added the NMDC stake sale, expected to garner Rs 7,000 crore, was slated for the first fortnight of December, and the Oil India divestment, too, would be sometime then. On the RINL initial public offer, which was deferred earlier, he said the government would go by professional advice.

The government had earlier softened its stand on pricing the Hind Copper issue after the ONGC share sale had to be rescued by public-sector insurers due to lack of interest from other investors. Independent equity advisor S P Tulsian said, had a few FIIs shown some interest or the average sale price been higher, the sentiment would have been better.

Blue Dart offer for sale oversubscribed
The offer for sale (OFS) of Blue Dart Express managed to garner bids for over 5.18 million shares, against the offer of 1.43 million shares. Blue Dart Express’ OFS floor price was set at Rs 1,720 a share — a discount of 16 per cent to yesterday’s closing price — for sale of 6.03 per cent in its subsidiary Blue Dart Express. DHL Express (Singapore) Pte Ltd, the promoter of Blue Dart Express, offered the shares to meet the 25 per cent minimum public shareholding criteria of the Securities and Exchange Board of India. The stock closed down 3.09 per cent, or Rs 63.45, at Rs 1,993.15 on BSE. The stake sale could fetch the company at least Rs 246.29 crore.

Source: Business Standard

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