The government will get about Rs 1,200 crore from the sale of its residual equity in Indian Petroleum Corporation Ltd (IPCL) at a rate of Rs 170 per share. Half of the the government equity will be offloaded in favour of retail investors.Briefing newspersons here on Saturday, Disinvestment Minister Arun Shourie said, “All of us feel good.” This is the first follow-on offering on a book-built basis in the country and would set up a benchmark for such deals in future, he added.The offer price for IPCL 7.2 crore shares was decided on Saturday by the government based on the response to the issue, which was oversubscribed 4.8 times. At a 5 per cent discount, the retail investors would pay Rs 161.50 per share against the prevalent market price of Rs 188, Shourie said. Share allocation would start on March 1. Out of the 50 per cent allocated to retail investors, 30 per cent has been set aside for individual investors who have bid for shares up to Rs 50,000. “All of them would get shares, and none of them would get below 90 per cent of their bids.” Only the individual investors would be eligible for price discounts. The balance of 20 per cent has been reserved for high networth individuals. All of them will get shares. The government had set a floor price of Rs 170 per share for selling its about 29 per cent residual stake in the Reliance-controlled company. Reliance was offered 5 per cent of the government’s residual equity at a price of Rs 195 per cent share, but it refused to subscribe. Reliance had acquired 26 per cent stake from the government in 2002 and subsequently made an open offer for additional 20 per cent stake, taking its total holding in the company to 46 per cent. Following Reliance’s refusal to pick additional 5 per cent stake in IPCL, the government added that quota of share to the public offer. Further, 5 per cent of government equity has been reserved for employees. Shourie said there was a demand of Rs 6,000 crore through two lakh applications. The offering received an overwhelming response from high-quality domestic and international investors as well as from retail investors. Elaborating on the allocation approved by the finance ministry, he said 50 per cent had been made to retail investors, even though 90 per cent demand had been generated through qualified instituional investors while the remaining 50 per cent had been allocated to qualified institutional bidders. Among QIBs, preference has been given to domestic mutual funds as their underlying investors are predominantly domestic retail investors. In this manner, the government has further enhanced allocaton to individual investors, which actually works to 60 per cent, Shourie said.
