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Icing on Tata cake

Mumbai, Aug. 7: The millions who queued up for a slice of the biggest initial public offering in the country have a candy to relish till the dice rolls: those who make it will get a share of Tata Consultancy Services for Rs 850.

The Tata company, which has attracted bids for a whopping Rs 5,420 crore, today set the share price Rs 50 lower than the Rs 900 ceiling it could have touched. Even at Rs 900 a share, the issue was oversubscribed.

The lower price means that when the share is listed on the stock exchange, it is certain to fetch a higher rate and offer a premium to those who have managed to pick it up at Rs 850.

Such an outcome will not only generate shareholder goodwill for TCS but also allow small investors to make a tidy profit, if they so wish, by selling the share after it is listed.

Nimesh Kampani, chairman of JM Morgan Stanley, one of the three lead managers to the TCS issue, said: “We have decided to fix the floor price at Rs 850 because we wanted to leave something on the table for the investors at the time of listing.”

Tata officials said the principal aim of the pricing is to ensure that the goodwill would keep investors with TCS for a long term.

Over a million retail investors have applied for TCS shares, spurred by the company’s reputation as well as the lack of viable investment options.

Out of the total 5.55 crore shares on offer, 25 per cent will be given to small investors picked through lottery. Between August 18 and 20, the applicants will know if they are lucky.

It is expected that one out of three applicants who invested for seven shares will be successful while for a lot of 14 shares, one out of two could romp home.

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