The Government will sell a little over 4 per cent of its shares in Hindustan Copper Ltd on Wednesday. This will bring down the Government shareholding to 90 per cent.
The floor price of the share will be Rs 70, which is at 3.65 per cent discount to the current market price. At this price, the Government expects to garner Rs 260 crore.
An Empowered Group of Ministers (EGoM) met on Tuesday to approve the floor price for offer-for-sale (OFS) through stock exchanges. This mechanism is just like an auction, where every investor bids on the floor price or above that. Except mutual funds, there is no reservation for any investor in such a mechanism.
“The EGoM has cleared 4.01 per cent stake sale in HCL. The issue will hit markets tomorrow,” Ravi Mathur, Secretary, Department of Disinvestment, told reporters after the meeting. The Finance Minister heads the EGoM which consists of the Commerce and Industry Minister, the Deputy Chairman of the Planning Commission, besides the nodal Mines Ministry.
Share slides 6%
Hindustan Copper’s disinvestment is being done to fulfil the Securities and Exchange Board of India norm, which stipulates minimum 10 per cent pubic shareholding in a public sector enterprise. This norm has to be fulfilled by August this year. However, news about disinvestment had a bad impact on the company’s share price, which slipped 6.62 per cent to close at Rs 72.65 per cent on Tuesday.
The Government had in November last year sold 5.58 per cent stake in HCL through the OFS route at an average price of Rs 156.56 apiece. The stake sale fetched Rs 808 crore to the exchequer.
In September 2012, the Cabinet had approved 9.5 per cent stake sale of HCL. The Government had then decided to go ahead with only one tranche of the issue and get a good price from the auction.
HCL is the second public sector divestment in the current fiscal. Earlier this month, the Government had raised Rs 568 crore by divesting 9.33 per cent stake in MMTC. The Government plans to raise Rs 40,000 crore through disinvestment in 2013-14.