New Delhi: Riding on strong demand from retail and institutional buyers, the government's 5 percent stake sale in power sector lender PFC was lapped up by investors, fetching about Rs 1,600 crore to the exchequer.
Despite a steep decline in broader markets, the offer for sale (OFS) for 6.60 crore Power Finance Corp (PFC) shares received bids for 15.42 crore shares worth Rs 3,747 crore.
The OFS finally got subscribed 2.34 times, making it the second successful disinvestment of current fiscal.
"Today Nifty showed its steepest fall since 2011 and there was an Asian market collapse and China market too collapsed considerably... Despite that we managed to have a successful offering. We got bids worth Rs 3,747 crore," Disinvestment Secretary Aradhana Johri told reporters here.
Although Johri did not give an exact amount that would come to the exchequer, she said: "I do not visualise anything very different from what we indicated earlier".
At a floor price of Rs 254 apiece, selling 6.6 crore shares, the government is expected to get over Rs 1,600 crore.
The sale saw robust demand from retail buyers with bids coming in for 5.92 crore shares, as against 1.32 crore reserved for them. The portion for retail investors, who also got 5 percent price discount, was subscribed 4.5 times.
Institutional investors bid for 9.49 crore shares, representing 1.80 times of the 5.28 crore shares on offer.
The floor price of Rs 254 a share was at a discount of 2.14 percent over Friday's closing price of Rs 259.55.
Shares of PFC closed at Rs 254.05, down 2.12 percent over previous close, tracking the broader benchmark Sensex which fell nearly 2 percent on fears of government curbs on investments through P-Notes.
PFC is the second PSU to be divested in the current fiscal under the government's disinvestment programme. In April, the government had sold 5 per cent stake in REC for Rs 1,550 crore.
The Department has Rs 69,500-crore target from PSU disinvestment in the current fiscal, of which Rs 41,000 crore would come from minority stake sale and Rs 28,500 crore from strategic stake sale.
Of the Rs 3,747 crore worth bids received, Johri said, Rs 2,414 crore has come from institutional buyers, while Rs 1,510 crore from retail bidders.
At present, the government holds 72.80 percent equity in Power Finance Corporation. After sale of 5 percent stake, government's holding will be reduced to 67.80 percent.
PFC is the first disinvestment under the modified OFS rules of Sebi under which companies are allowed to disclose stake sale plans two 'banking' days ahead of the issue.
Johri said the Disinvestment Department's contention that retail investors do not need two trading days of advance notice to invest in PSU disinvestment stands vindicated as retail investors' portion in PFC OFS has been over-subscribed 4.5 times.
The Department of Disinvestment had approached Sebi in March, saying they do not want trading days in-between the announcement and stake sale. They had said that trading days in between hammer down share prices of the disinvestment bound PSU.
Earlier, the companies were required to give an advance notice of two trading days before the OFS, which the government says, gave scope for speculators to beat down the share price of the disinvestment-bound PSU.
When asked if the government would go ahead with disinvestment of PSUs in current market conditions after tasting success with PFC, Johri said all through May, June and earlier part of July, the market has been very difficult to enter into.
"If you manage in adverse circumstances once, does not mean you jump into adverse circumstances each time," she said, adding that the disinvestment department will look for window of opportunity to go ahead with the stake sale plans.
Johri said the disinvestment department is working to garner retail investor interest.
"India is a very good bet for anybody, but it is a very difficult market," she said, adding a note of caution that coming days are not going to be easy.
On markets declining due to fears of government putting stricter regulations for P-Notes, Johri said: "FII sentiment does get impact by P-Notes. No wrong cue needs to be taken by anybody".
