Nalco offer for sale over-subscribed
Nalco?s shares fell nearly 9% near the deep-discount floor price set for the company?s stake sale
Mumbai: State-owned aluminium maker National Aluminum Co Ltd’s (Nalco’s) offer for sale (OFS) was oversubscribed on Friday, but its shares fell nearly 9% near the deep-discount floor price set for the company’s stake sale.
“The issue could sail through smoothly as the pricing was attractive. In fact, it was at a substantial discount," said Rikesh Parikh, vice-president of equities at Motilal Oswal Securities Ltd.
The floor price was set at ₹ 40 per share after market hours on Thursday, but dealers and media reports had already been pegging it at that level since Thursday morning. The stock has shed nearly 13% in last two sessions. For the year to date, Nalco shares have declined 17.82% on the BSE; the 30-share benchmark Sensex is almost unchanged.
The government divested around 10% of the company, and the issue was subscribed 121.8%. In a filing to the BSE on Thursday, the company said the government proposes to sell 128.9 million shares with an option to sell an additional 128.9 million shares, collectively aggregating to around 10% of the total paid-up equity share capital.
“In the pursuit of garnering funds through divestment route and ensuring decent subscriptions, government is resorting to price destruction, which is detrimental to financial health of investors at large," said Deven Choksey, managing director and chief executive officer of Kisan Ratilal Choksey Shares and Securities Pvt. Ltd.
Nalco shares closed 8.8% lower at ₹ 40.35 on the BSE, while the Sensex declined 0.7% to 19,427.56 points. The government held an 87.15% stake in Nalco before divestment, and post-disinvestment it will be reduced to 75%. Axis Capital, SBI Caps and IDFC were the merchant bankers for the Nalco disinvestment.
In November last year, the government had deferred the stake sale in Nalco saying the company’s second quarter financial performance was not reflective of the true financial position of the aluminium maker.
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