Forget market turmoil, Indian Oil stake sale fetches govt Rs9,300 cr

24 Aug 2015

Monday's market hammering unnerved retail investors but institutional investors invested with a vengeance, helping the government mop up Rs9,300 crore through an offer for sale of a 10 per cent stake in Indian Oil Corporation through stock markets on Monday.

In fact, the sale of 242.8 million shares by the government on Monday was over-subscribed despite market turmoil and the absence of retail investors. The stake sale received bids for over 287.4 million shares, representing 1.18 times the shares on offer as of 3:25 pm, as per NSE data.

Retail investors, however, failed to gain from the biggest disinvestment of this fiscal by picking up only less than a fifth of the quota.

The government had set a floor price for the sale of shares in top state-run refiner Indian Oil Corp Ltd at Rs387 each, the company said, a two per cent discount to Friday's close.

I addition, retail investors were offered a 5 per cent discount, making it even cheaper for them.

At the floor price of Rs387 apiece, the sale of 242.8 million shares would fetch about Rs 9,300 crore to the exchequer, after considering 5 per cent discount being offered to retail shareholders.

Institutional investors cornered a major chunk of the stock on offer bidding for 278.5 crore shares, against 194.2 crore shares on offer. The portion was subscribed 1.43 times.

Retail demand, however, remained tepid with bids for just 88.88 lakh shares against 48.5 million shares on offer, forming subscription of only 18.32 per cent.

The government held 68.60 per cent interest in IOC before the stake sale. It will now be left with 58.60 per cent equity stake in the country's largest refiner.

The IOC share sale is the fourth disinvestment this fiscal but the biggest in 2015-16 so far. This takes amounts raised from divestments to over Rs12,600 crore.

The government is targeting to raise Rs69,500 crore from disinvestment in the current fiscal.

In 2014-15, the government had set a target of Rs63,425 crore from stake sales, including Rs5,000 crore from the sale of special drawing rights to the Reserve Bank of India.

IOC shares closed 4.11 per cent, or Rs16.20 down at Rs378.25 on the BSE. The decline in IOC scrip followed the slump in broader markets.

The BSE Sensex tanked 1,624.51 points, or nearly 6 per cent, to settle at 25,741.56 today.