Government raises Rs 800 crore via Hind Copper selloff
NEW DELHI: The government's disinvestment programme got off to a steady start on Friday with the Centre mopping up Rs 800 crore from the sale of 5.6% stake in Hindustan Copper, with help from public sector banks and insurers, and in the process raised expectations that it could well meet the Rs 30,000 crore selloff target for the current financial year.
In fact, the response to the auction on stock exchanges prompted the government to even increase the size of the sale programme from 4% to 5.6%. By the end of the auction, the government had managed to sell not only 37 million shares that it had put on the block but even accepted the additional 51 million bids. The government will sell another 4% stake during the course of the year to lower its stake to 90%.
"It has been decided to accept the entire number of shares bid for at or above the floor price. Thus, approximately 5.58% of the total paid up share capital of HCL stands divested through this issue. The approximate gross receipt from the issue is Rs 800 crore," the government said in a statement. Unlike a public issue of shares, an offer for sale or auction is a quicker way to sell stake with the issue opening at 9.30 am and ending at close of market hours.
In fact, the response to the auction on stock exchanges prompted the government to even increase the size of the sale programme from 4% to 5.6%. By the end of the auction, the government had managed to sell not only 37 million shares that it had put on the block but even accepted the additional 51 million bids. The government will sell another 4% stake during the course of the year to lower its stake to 90%.
"It has been decided to accept the entire number of shares bid for at or above the floor price. Thus, approximately 5.58% of the total paid up share capital of HCL stands divested through this issue. The approximate gross receipt from the issue is Rs 800 crore," the government said in a statement. Unlike a public issue of shares, an offer for sale or auction is a quicker way to sell stake with the issue opening at 9.30 am and ending at close of market hours.
This was only the second auction for government stake sale after the ONGC disinvestment in March, when the new route faced major starting problems and finally resulted in LIC having to bailout the issue. In all, eight auctions have been held so far, data on the NSE showed. Again, LIC is said to have been a major bidder, putting in bids for over Rs 100 crore and other public sector banks too chipped in. Data from stock exchanges was, however, not immediately available. But unlike last time, thanks to more awareness and mock sessions, the Hindustan Copper issue went off smoothly. Bankers said the steep discount to the market price also helped. Against Thursday's closing price of over Rs 266 a share, the base price was set at Rs 155 for every equity share with a face value of Rs 5 each. Although even this was cited to be on the upper side by market players given that the price-to-earnings (P/E) ratio, a key measure if a stock is expensive or not, is at 46.5, compared to 21.30 for Sterlite Industries, the state-owned company's closest competitor.
With the government offering a steep discount, the company's stock fell 20% and hit the lower circuit at Rs 213 on the BSE on Tuesday. With issues such as NTPC, BHEL, SAIL and Oil India during the remaining four months of the fiscal, the government is hoping to meet the Rs 30,000 crore target.
With the government offering a steep discount, the company's stock fell 20% and hit the lower circuit at Rs 213 on the BSE on Tuesday. With issues such as NTPC, BHEL, SAIL and Oil India during the remaining four months of the fiscal, the government is hoping to meet the Rs 30,000 crore target.
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