It’s raining public offers in the markets these days. And the past week has seen a series of ups and downs as far as the fortunes of these offers are concerned. Never before in the history of the Indian capital market have the bourses seen as many public offers — and that, too, of such large size — hit the market. The government’s agenda is to raise about Rs 14,000 crore by way of disinvesting its residual stakes in six companies — IPCL, IBP Co Ltd, Dredging Corporation of India Ltd, CMC Ltd, Gail India Ltd and ONGC. Of the six, five have already hit the market, and have been oversubscribed, a fact which will surely lead Disinvestment Minister Arun Shourie to heave a sigh of relief, since there was enough drama to start with. But with these five issues worth only around Rs 4,000 crore, and the biggest-ever ($2 billion) Rs 10,000 crore ONGC float slated to open on March 5, the biggest test is yet to come. And if the first five have witnessed high drama, all eyes are now trained on the mother of all offers: ONGC. However, Shourie, in the first few days after the offers got under way, was a worried man. And not without reason. The six stocks where offers for sale were being carried out took a battering on the bourses as the issues opened, with speculators probably seeking to push the price down in order to try and get the cut-off price close to the declared floor prices of the issues. The worries started when IBP took only 0.26 per cent subscription on Day One, leading to fears that the battered secondary market prices were taking their toll on the offer, since it then made more sense for some to buy in the secondary market rather than the offer, or at least wait till the last day of the offer. But true to style, on Wednesday, Shourie took the battle head-on to the camps of these unseen speculators by declaring that he would take up the issue of poor subscription with the lead managers to the issues. The minister also seemed to hint that he knew who were the people causing the problems in the market. Like a miracle, the Shourie effect brought life back to the offers from Thursday itself. Despite the market in general taking a dip — the Sensex fell 51 points on Thursday — the subscriptions to the offers picked up sharply, with IBP witnessing a 74 per cent subscription compared to the under one per cent figure the day before. Did some interested parties really try to manipulate the market? While Sebi chairman G. N. Bajpai reiterated that the regulator was on “very, very, very high alert” to spot manipulations, the general market feedback is that most of the institutional and retail participants had been booking profits to subscribe to these primary offers. Even FIIs, thus far aggressive buyers in the secondary market, turned net sellers during the last week, recording close to Rs 500 crore of net sales in equities. Mutual funds, too, have been net sellers to the tune of over Rs 500 crore during all of February. However, none rules out the possibility of big players attempting to hammer prices down, so that the 25 per cent minimum retail portion of the issues fail, and these big players can corner larger chunks of these issues. The Sebi top brass and finance secretary D. C. Gupta had a crucial meeting on Friday to discuss the market situation, even as speculation mounted on why, on the same day, secretary (financial sector) N. S. Sisodia was meeting UTI Mutual Fund chairman M. Damodaran? Was a government-directed bailout taking place? None would tell. And certainly, none of the lead managers is willing to comment on the aspect of market manipulation. For the time being, however, the Shourie effect seems to have worked. But with ONGC offer slated to open next week, the government and the market regulator will be keeping a hawk’s eye on every little movement in stock prices.
