Concor receives bids for twice the number of shares on offer
Bids worth Rs.325 crore at Rs.1,201 per share received from institutional investors on floor price of Rs.1,195
Mumbai: The government’s effort to sell 5% in Container Corp. of India Ltd (Concor) through an offer for sale (OFS) witnessed healthy interest with institutional investors bidding for twice the number of shares on offer.
While foreign portfolio investors bid 40% of the shares on offer, mutual funds bid 30% and insurance companies 125% of the stake on offer. Shares of Concor closed at Rs.1,195.55 each on the BSE, on Wednesday, down by 2.54%, while the benchmark Sensex closed at 24,793.96 points, up by 0.55%.
The government, on Tuesday, said it will sell as many as 9.74 million shares or 5% in the state-controlled logistics firm through OFS. A floor price of R1,195 per share was set by the government. However, it received bids of Rs.325 crore at Rs.1,201 per share.
Retail investors will be able to bid for shares worth Rs.233 crore on Thursday. The government expects to fetch Rs.1,165 crore from the share sale.
“With the markets down from their highs, it makes sense for institutional investors to acquire shares at this price. For retail investors the process tends to be a bit complex and the discount of 5% is not too significant to attract retail investors,” said Prithvi Haldea, chairman of Prime Database group, a primary market tracker.
So far this fiscal, government has mobilized Rs.18,352 crore through minority stake sales. In the 2016-17 budget, the finance ministry revised the disinvestment target for 2015-16 to Rs.25,000 crore against the budget estimate of Rs.69,500 crore.
For 2016-17, it has set a disinvestment target of Rs.56,500 crore, including Rs.20,500 crore through strategic sale. Volatile market conditions have affected government’s disinvestment plan, which mostly have commodity and oil stocks in the pipeline.
Disinvestment secretary Neeraj Kumar Gupta has said the department will make all efforts to meet the target and it has other options apart from minority stake sale to meet the target without elaborating further.
In an interview on 4 March, Gupta said that government has many options, including listing unlisted central public sector undertakings in the equity market. “Try to understand that we have almost 235 CPSUs (central public sector undertakings). Out of them, 160 are profit-making and only 44 are listed. Even these 44 listed CPSUs, if you examine in terms of market capitalization, we are commanding 12-13% of the total market cap. There is a huge set (of CPSUs) available to play with or to operate with,” he said.
The government is also expected to fetch almost R13,784.85 crore (excluding tax on distributing dividend) from Coal India Ltd (CIL), which declared an interim dividend of Rs27.40 per share last week. The government holds a 79.64% stake in the company. It had earlier hired banks to sell 10% in CIL through an offer for sale.
Government will have 56.8% stake in Concor after the 5% stake sale process is complete. The Concor share sale is the seventh disinvestment offer from the government in this fiscal. Last month, the government raised almost R5,000 crore by selling 5% of its stake in power producer NTPC Ltd. The total book was subscribed 1.53 times, data showed.
Apart from NTPC, the government has sold a part of its stake in firms such as Rural Electrification Corp. Ltd, Power Finance Corp. Ltd, India Oil Corp. Ltd, Dredging Corp. of India Ltd and Engineers India Ltd.
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