The Telegraph
Since 1st March, 1999
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Stampede to scoop up shares

Mumbai, Feb. 20: The great public issue season roared off the ground with demand outlasting supply on the first day of the share sale in IPCL, the petrochemicals giant at the forefront of a fleet of six companies where the government is reducing its stake.

As curtains fell on the scramble on Day One, investors had bid for IPCL’s 6.48 crore shares —more than the 5.94 crore shares put on the block by the government. Most bids were pegged at Rs 170 per share — the floor price set by the government.

“The India story is intact,” declared Ramesh Damani, a BSE broker, after hearing about the oversubscription.

The diversion of huge funds into the primary issue market has told on the stock exchanges. The sensex, the benchmark index of the Bombay Stock Exchange, has plunged below the 6,000-mark but the share prices of IPCL and the five other PSUs — ONGC, CMC, Dredging Corporation, IBP and GAIL — have gained on the back of the response to the first public issue.

The sensex today closed at 5850.72 with an overnight loss of over 4 points. “We are trying to raise in one month what we haven’t raised in five years,” said Ashok Kumar, an analyst.

The maximum number of bids was from financial institutions but retail investors have begun to trickle in, investment bankers said. The issue will remain open till February 27 after which the government would finalise the offer price.

The government is relying on the book-building method to arrive at the offer price, which allows investors to bid at any price from the minimum specified price.

The government has offered a 5 per cent discount to retail investors. But retail investors complain that the rules tilted in favour of the institutions are holding them back from taking the plunge without hesitation.

Institutions can bid without paying money upfront whereas retail investors have to cough up money straightaway.

Moreover, the institutional investors can revise their bids before the offer closes, giving them room to improvise later, depending on the conditions prevailing at different points of time.

The overwhelming response to the IPCL issue came just as teams led by the top brass of the six companies and merchant bankers are fanning out to meet foreign investors from global financial centres like Singapore, Hong Kong and London and the east and west coast of the US.

More than Rs 15,000 crore is expected to be raised through the equity sale carnival, which will help the government meet the target on divestments. The target had looked beyond its reach after a legal setback to the sale of shares in two public sector oil giants.

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