| Walking the extra mile
Calcutta, June 13: Following the stupendous response to Maruti Udyog’s maiden initial public offering (IPO) of 7.22 crore shares, the government is expected to enhance the issue size by 10 per cent and sell an additional block of 72.2 lakh shares.
Merchant bankers managing the issue said the government would take a call next week on whether to divest an additional 2.5 per cent stake in the company, and its decision would be communicated to the public after the issue had closed on June 19.
The government will rake in an additional Rs 83.03 crore at the least if it decides to increase the issue size. Its total earnings, in that case, would certainly go past Rs 900 crore. With bids coming in even at Rs 200, the government is set to earn over Rs 1,000 crore from the sale of shares.
Maruti’s IPO has been subscribed more than four times the issue size in the first couple of days. On the Bombay and National stock exchanges, bids for more than 30.28 crore shares have already been received. On day two, investors bid for close to 20 crore shares on the two bourses combined — nearly twice as many shares as day one.
Observers say, financial institutions — both domestic and foreign — have shown great appetite for the stock. Institutional investors bid for nearly 8 lakh shares at Rs 200 on the National Stock Exchange today. On the Bombay Stock Exchange, bids for over 10 lakh shares have been received at an unspecified ‘best price’.
Most of the bids, however, still continue to be in the range of Rs 115 to Rs 120. The government has set Rs 115 as the floor price for the auction. More than 77 per cent of the bids received are in the Rs 115-120 range, while bids in the range of Rs 115-125 exceed 99 per cent.
Twenty five per cent of the issue is reserved for retail investors, but the man on the street is not as excited as the institutions as yet.
But experts say most of the retail subscription would come next week, particularly over the last couple of days.
“With a number of banks — like Citibank, State Bank of India, IDBI Bank — and several finance companies offering loans to retail investors for the IPO, the issue should attract a fair amount of retail participation.
“What is more, the institutional interest in the stock shows exiting would not be difficult and should generate confidence among retail investors,” said a senior broker.