The Telegraph
Since 1st March, 1999
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Maruti leaves market thirsty for more

Mumbai/New Delhi, June 19: Retail investors braved nagging rains to swarm merchant bankers’ offices in a patient wait for a chip of Maruti Udyog (MUL) — a scramble that conjured up boom-time visions.

The company’s initial public offer (IPO) was over-subscribed 9.3 times. It could be more, even 10 times, by the time the final tally is out close to midnight. There were bids for over 67.39 crore shares against the 7.22 crore shares that have been put on the block. More than two lakh retail investors are in the queue, and total subscriptions are close to Rs 8000 crore.

The retail rush has fuelled expectations that more than the planned 25 per cent (of the issue size) will go to small investors. Of the remaining 75 per cent, 60 per cent has been earmarked for institutional investors, while 15 per cent is meant for the non-institutional segment.

In a sign of just how much Maruti shares are coveted, the bulk of the bids (for 31.68 crore shares) on the last day were tabled at a price of Rs 125. Till Wednesday, the maximum number of bids came at Rs 120 apiece. Today, there were over 16 crore bids at Rs 125. Merchant bankers said the range also widened to Rs 115-Rs 390.

The flourish at the finish has turned the attention to the cut-off price, which will be announced on Friday. Expectation is building up that the figure will be between Rs 120 and Rs 125 per share, but some optimists feel the government could be generous enough to settle for Rs 115 — also the floor price.

In Delhi, the disinvestment ministry hinted as much, saying the final price would be fixed in the range of Rs 115 to Rs 120. “The government is interested in maximum dispersion of shares, instead of concentrated holdings. An inter-ministerial group will, in consultation with the lead managers to the issue, finalise the pricing and allocation. These would be announced within two days,” an official told The Telegraph.

The government is reducing its stake in the car-maker to 20.8 per cent from 45.8 per cent, but it would retain an over-subscription up to 10 per cent of the offer.

Analysts said there is a reasonable chance that the government will raise the allocation for retail investors given the overwhelming response from this segment.

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