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IPCL offer fetches Rs 1200 cr
- Small investor pays Rs 161.50 apiece; CMC oversubscribed 10.5 times

New Delhi, Feb. 28: The government has raised Rs 1,200 crore by offloading its residual stake in Indian Petrochemical Corporation at the floor price of Rs 170 per share to institutional investors while small investors will get them at a price of Rs 161.50.

Disinvestment minister Arun Shourie told reporters the government would allot a 30 per cent stake, amounting to nearly 22 million shares, to small investors at a price that is nearly 14 per cent lower than the market price of Rs 188.

Government sources said the company’s shares are likely to be listed within 10 to 15 days on the Bombay Stock Exchange. “We want the money to be ploughed back for the ONGC issue,” he said.

The issue, which closed yesterday, has been oversubscribed 4.8 times and the final price per share, which has been determined through competitive bidding, was set at the floor price of Rs 170.

“We could have cut the book at a higher price but then it would have deprived many people who wanted to participate,” said Shourie. “Every small investor who applied will get 90 per cent of the shares applied for.”

He also said the share allocation — which will start on March 1 — has been biased towards domestic institutional investors.

The selloff is part of a privatisation drive to raise Rs 14,500 crore because of the government’s need to raise funds before the end of the year in March to bridge its expanding fiscal deficit target.

The government is selling its remaining 26.25 per cent stake in CMC and 26 per cent in IBP. It is also offering 20 per cent equity in state-run Dredging Corporation of India Ltd, 10 per cent stake in Gail and ONGC respectively, through an initial public offer.

For all these issues, the government has given small investors a discount on the final offer price. Analysts said the discounting aims to grab a few votes ahead of general elections, which is scheduled for late April.

Meanwhile, investors lapped up the government’s offer for sale of residual equity in CMC Ltd on the last day of bidding today, leading to an oversubscription by 10.51 times.

The CMC public issue — which has been lead managed by HSBC Securities and Enam Financial Consultants — has been the most successful of the four IPOs till now. Against a minimum price of Rs 475, the maximum bids for CMC shares came in at Rs 485 (for a quantity of 2.4 crore shares).

The public offer for Dredging Corporation of India was also oversubscribed by 1.55 times.

According to the latest data available with the Bombay Stock Exchange, investors placed bids for 4.18 crore shares for the CMC offer against 39.76 lakh shares available for subscription.

The response from three classes — qualified institutional buyers (QIBs), high networth individuals and retail investors —to the CMC offer was overwhelming and received oversubscription from these categories, investment banking sources said.

Dredging Corporation’s offer for sale received bids for 86.80 lakh shares against an offer size of 56 lakh shares.

IBP Ltd’s public offer of 57.58 lakh shares, which had received poor response in early days, ended the sixth day with total bids for 82.47 lakh shares.

The government’s offer for sale of 8.45 crore equity shares in GAIL (India) Ltd received bids for 12.14 crore shares — an oversubscription of 1.43 times, according to BSE data.

The Gail issue, which closes on March 5, has already been oversubscribed 1.43 times with the maximum bids (for 9.2 crore shares) coming in at the minimum price of Rs 185.

Except for CMC, the other subscriptions to the other PSU issues pales in comparison to last year’s 10 times oversubscription for Maruti Udyog Ltd.

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