Kicking off its disinvestment programme for the current fiscal on a robust note, government today mopped up over Rs 1,550 crore by selling 5 per cent stake in power sector lender REC in an offer for sale that was subscribed over 5.5 times.
With strong demand from retail and institutional investors, the issue received bids for over 27.31 crore shares as against 4.93 crore shares on offer, resulting in over- subscription of 5.53 times, as per data available with stock exchanges.
The stake sale in Rural Electrification Corpn (REC) is the first in the government’s disinvestment pipeline for the current fiscal.
The government has budgeted to collect Rs 41,000 crore from PSU disinvestment this fiscal. The REC issue received bids worth Rs 7,621 crore, with retail investors bidding for shares worth Rs 3,415 crore. Institutional investors put in bids worth Rs 4,734 crore which include FII bids worth Rs 1,692 crore.
The portion reserved for retail investors, who got a 5 per cent discount, was subscribed 9.02 times. The general category portion was over-subscribed 4.66 times. “We are very happy with REC issue.
We started at beginning of fiscal, we have been studying the market and timed it right,” Disinvestment Secretary Aradhana Johri said. As against a floor price of Rs 315 a share for the OFS, REC shares closed at Rs 330.05, up 2.61 per cent over previous close. The share sale received strong response from retail and institutional investors and was fully subscribed within an hour of its opening.
The indicative price for retail investors was Rs 325.10 and for institutions Rs 324.73. At the floor price of Rs 315 apiece, the government would raise over Rs 1,550 crore from the Offer For Sale (OFS). The floor price was at a discount of 2.07 per cent over yesterday’s closing share price of REC.
With this disinvestment, the Government’s stake in power project financing firm Rural Electrification Corporation (REC) will come down to 60.64 per cent. As much as 20 per cent of the offer size was reserved for retail investors, who can bid for shares worth Rs 2 lakh. Besides, 25 per cent of the offer would be alloted to mutual funds and insurance companies.
The government has missed its disinvestment target for the past five fiscals. In 2014-15, government had raised about Rs 24,500 crore through disinvestment against the target of Rs 43,425 crore.