SAIL Offer For Sale Subscribed 3.6 Times On First Day
A man looks up at an electronic ticker board that indicates stock figures at the Bombay Stock Exchange (BSE) in Mumbai, India (Photographer: Dhiraj Singh/Bloomberg)

SAIL Offer For Sale Subscribed 3.6 Times On First Day

Bookmark

The government's sale of its 5% shareholding in India's largest steelmaker Steel Authority of India Ltd. was subscribed 3.6 times on the first day of its opening on Thursday.

Over 74.74 crore shares were sought by non-retail investors at the close of trading hours, stock exchange data showed.

The shares sought were 362% of the overall issue size and nearly 413% of the shares reserved for non-retail investors who were supposed to make bids on the opening day.

Of the bids, 37.46 crore put in 100% margin money.

The government is selling 20.65 crore shares or 5% of the total equity of SAIL through the offer for sale.

It has an option to sell an additional 20.65 crore share of SAIL in case of over-subscription. The overall divestment, firm plus greenshoe, will total 10%.

A floor price of Rs 64 per share was set for the OFS. Retail investors can bid on Friday.

Of the 20.65 crore shares on offer, 18.07 crore have been reserved for non-retail investors and 2.58 crore for retail investors.

The indicative price of bids that came in on Thursday was Rs 65.49, exchange data showed.

SAIL closed nearly 10% down on the BSE at Rs 67.25.

Also read: SAIL Stock Falls Most In Eight Months On Government’s Stake Sale Plan

At least 12.5% of the offer shares will be reserved for allocation to retail investors.

No single bidder other than mutual funds registered with the Securities and Exchange Board of India will be allocated over 25% of the shares on offer, according to the terms of OFS.

A minimum of 25% of shares will be reserved for mutual funds and insurance companies.

At the floor price, the sale of 41.3 crore shares (firm plus greenshoe) will fetch the government over Rs 2,600 crore.

The SAIL OFS is part of the government's disinvestment programme through which it is targeting to raise a record Rs 2.1 lakh crore in the current fiscal ending March 31, 2021.

Also read: Why SAIL Has Surpassed Analysts’ Forecasts

So far, the government has raised Rs 28,298.26 crore from disinvestment proceeds. This includes Rs 14,453.77 crore received as dividend from state-owned firms. The remaining Rs 13,844.49 crore proceeds include Rs 1,065.37 crore from selling shares in NTPC share buyback.

A Rs 4,600-crore initial public offering of the Indian Railway Finance Corporation, a public sector undertaking under the railways ministry, will open on Jan. 18. The IPO comprises up to 178.2 crore shares of face value of Rs 10 each.

The government is expected to mobilise Rs 1,544 crore at the upper price band of Rs 25-26 per share.

The government is most likely to miss its disinvestment target by a wide margin and the fiscal deficit is not likely to be anywhere near the target of 3.5 per cent of the GDP in 2020-21 (April 2020 to March 2021).

While privatisation of firms such as Bharat Petroleum Corporation Ltd and Air India has been pushed to the next fiscal due to Covid-19-related delays, tax collections have been hit hard as restrictions imposed to curb coronavirus dented incomes all around.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.