First success: SAIL share sale oversubscribed 2 times

The Government’s divestment drive got off to a flying start on Friday, with the offer-for-sale (OFS) by state-run Steel Authority of India Ltd (SAIL) getting oversubscribed by over two times. The Government will raise at least ₹1,715 crore from the offer.

The OFS received bids for over 42.93 crore shares against more than 20.65 crore shares on offer, data available on NSE showed.

“Retail investors were given 10 per cent allocation and this category was also oversubscribed more than 2.5 times, a record for any retail participation in any OFS. In order to facilitate retail investors, a 5 per cent price discount was offered to them. This OFS will fetch ₹1,715 crore approximately for the Government,” the Finance Ministry said in a statement.

The offer got bids aggregating to over ₹3,400 crore, but with the Government not opting for the green shoe option, only ₹1,715 crore would come to the exchequer

With this divestment, the Government’s share in SAIL would come down from 80 per cent to 75 per cent and the company has become compliant with SEBI’s public shareholding norms of 25 per cent for listed companies.

This is the first disinvestment offer this fiscal. The Government has set a target of raising ₹43,425 crore through selling stakes in various public sector firms during the current fiscal.

The disinvestment plan includes a 5 per cent stake sale in Oil and Natural Gas Corporation, 10 per cent in Coal India and 11.36 per cent in NHPC.

Arun Kejriwal, Founder, KRIS Research, said: “The response from retail investors is excellent and the Government needs to take note of the same. However, confusion about the cut-off price has to be eliminated in future issues to ensure better retail participation.”

Bids with 100 per cent margin constituted 0.45 times the OFS size, while those with no margin money constituted 1.62 times the OFS size. The non-retail portion was oversubscribed 2.01 times. Indicative price for retail investors was ₹83.88, while the same was ₹83.45 for non-retail investors. Axis Capital, Deutsche Equities HSBC Securities and Capital Markets (India), JP Morgan India, Kotak Securities and SBICAP Securities were the selling brokers to the issue. In the secondary market, the SAIL scrip closed at ₹83.5 on the NSE, losing 2.05 per cent with a traded quantity of over 2.09 crore shares and a delivery percentage of 42.38.

On the BSE, the scrip lost 2.99 per cent to close at ₹82.80, doing a volume of 27.46 lakh shares with a delivery percentage of 42.27.