Buoyed by a strong participation from foreign investors, the government managed to mop up Rs 6,000 crore from the sale of its 10% stake in the iron ore miner NMDC. The issue through the auction route on stock exchanges was oversubscribed 1.73 times — a result that is being seen as a leg up for the Centre’s disinvestment target that has yielded little revenue so far.
Unlike the past two auctions — ONGC in March and Hindustan Copper last month — state-run banks and LIC did not play a dominant role with foreign institutional investors (FIIs) bidding for half the issue.
Against the 39.7 crore shares on offer, bids for 68.7 crore shares were received. The sentiment in the market seems to have changed as a buoyant response to the NMDC auction comes just a day after a massive oversubscription of the public issue of shares of ratings agency CARE. Several other companies such as Bharti Infratel and jewellers are in the process of raising funds.
A finance ministry officer said the average weighted price of the bids was Rs 150 a share, compared to an offer price of Rs 147. While most FIIs bid around the Rs 150 level, local banks and financial institutions preferred to stay closer to the floor. Shares will be allotted on the basis of “price priority”, or in line with your bid price.
In recent weeks, as the sentiment has improved, FIIs have returned to the Indian stock market helping push the sensex to a 20-month high, and in the process also propped up the rupee.
NMDC was the second disinvestment candidate in the current fiscal during which the government plans to raise Rs 30,000 crore by selling stakes in around a dozen companies. On November 23, it had garnered Rs 808 crore by selling a 5.6% stake in Hindustan Copper.
The government plans to sell a 9.5% stake in NTPC on January 15, while it has got a go ahead to sell stakes in several other companies, including SAIL, BHEL, Oil India, MMTC, Rashtriya Ispat Nigam and Nalco.
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