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PFC stake sale: Government nets Rs 1,600 crore

Non-retail portion was oversubscribed 1.8 times . Retail portion was oversubscribed 4.5 times with bids for 5.92 crore shares as against 1.32 crore shares reserved for them.

By: ENS Economic Bureau | New Delhi |
July 28, 2015 1:26:08 am

On a day when the Bombay Stock Exchange Sensex lost 551 points, the Centre’s five per cent stake sale in power sector lender Power Finance Corporation (PFC) on Monday was fully subscribed with strong demand from retail investors.

According to data with the BSE, the offer for sale of 6.6 crore shares received bids for 15.41 crore shares and was oversubscribed 2.34 times.

“The PFC share sale received bids worth Rs 3,747 crore and will help the government raise Rs 1,600 crore,” said disinvestment secretary Aradhana Johri at a press conference, adding that the good response was despite the volatility in the stock markets.

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While the non-retail portion was oversubscribed 1.8 times with bids for 9.49 crore, the retail portion was oversubscribed 4.5 times with bids for 5.92 crore shares as against 1.32 crore shares reserved for them.

Retail investors get a discount of five per cent on the floor price and a minimum of 20 per cent of the size of the offer is reserved for them.

The floor price of Rs 254 a share was at a discount of 2.14 per cent over Friday’s closing price of Rs 259.55.

However, tracking the broader benchmark Sensex which fell nearly 2 per cent on fears of government curbs on investments through P-notes, shares of PFC ended 2.12 per cent lower at Rs 254.05 a piece.

Following the stake sale, the Centre’s holding in PFC will fall to 67.80 per cent from the current equity of 72.80 per cent.

PFC is the second state- owned firm to be divested as part of the disinvestment line-up for 2015-16. In April, the government had sold 5 per cent stake in REC for Rs 1,550 crore.

The Union Budget has set a target of Rs 69,500 crore from disinvestment in public sector unit this fiscal, of which Rs 41,000 crore would come from minority stake sale and Rs 28,500 crore from strategic stake sale.

PFC is the first disinvestment under the modified OFS rules of Sebi under which companies are allowed to disclose stake sale plans two ‘banking’ days ahead of the issue.

The department of disinvestment had approached Sebi in March saying they do not want trading days in-between the announcement and stake sale.

Earlier, companies were required to give an advance notice of two trading days before the OFS, which the government says gave scope for speculators to beat down the share price.

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