The Centre’s offer for sale (OFS) for the divestment of government five per cent equity in Steel Authority of India Ltd. (SAIL) that was concluded on Friday was oversubscribed more than two times. This OFS is expected to raise Rs.1,715 crore for the Centre.
The additional 10-per cent allocation for retail investors was also hugely oversubscribed (more than 2.5 times), a record for any retail participation in any OFS, according to a Finance Ministry release.
The government had offered a 5-per cent discount to retail investors. Following the completion of the divestment, the Centre’s shareholding in SAIL will come down to 75 per cent. This will make the public sector company compliant with the Securities and Exchange Board of India’s public shareholding norms.
These norms require companies listed on the stock exchanges to maintain minimum public floats of 25 per cent.
The Modi Government had in September approved a proposal for raising 10 per cent additional equity by SAIL through an offer for sale in two separate tranches. The first tranche sale was completed earlier.
Other proposals It had also approved the sale of stakes in Coal India Ltd. (CIL), Oil and Natural Gas Corporation (ONGC) and National Hydroelectric Power Corporation (NHPC).
The Finance Ministry had proposed shares sales of 10 per cent in CIL, 5 per cent in ONGC and 11.36 per cent in NHPC. The disinvestment proposals are in line with those originally drafted by the UPA government before the elections. The Finance Ministry estimates that the 5 per cent disinvestment in ONGC alone will fetch Rs.18,000 crore, and the 10 per cent stake sale in CIL will rake in at least Rs.25,000 crore. The stake sales will be completed through offers for sales conducted via e-auctions on the stock exchanges.
The government has already selected merchant bankers for managing the disinvestments in ONGC and NHPC, and is in the process for finalising the managers for CIL’s offer for sale.
The UPA government had sold a 5-per cent stake in ONGC in 2012 for Rs.14,000 crore. State-owned LIC had picked up 95 per cent of the total shares on the block for over Rs.12,000 crore.
