MMTC stake sale gets 1.55 times subscription

Amid turbulent equity markets on Thursday,the government managed to successfully bring down its holding in MMTC to 90 per cent through the offer for sale

Written by ENS Economic Bureau | Mumbai | Published: June 14, 2013 1:23:56 am

Amid turbulent equity markets on Thursday,the government managed to successfully bring down its holding in MMTC to 90 per cent through the offer for sale. The issue is the first divestment this fiscal.

The auction witnessed a subscription of 1.55 times or investor interest worth Rs 877 crore. The government offloaded 9.33 per cent stake in the company through the sale. The floor price was set at Rs 60 per share.

The issue saw interest from all sections — institutions,retail investors and high net worth individuals (HNIs). State-owned Life Insurance Corporation (LIC) was one of the top bidders at the auction. LIC is told to have placed 25 per cent of the total bids received for the issue which amounts to over Rs 200 crore.

“The issue witnessed a wide participation from institutions,individual sand HNIs,” said Indraneil Borkakoty,MD and head,equity capital markets,IDFC Capital,which is one of the seller members to the issue. The other two members are Avendus Securities and IDBI Capital Markets.

Market players however say that it is mostly the institutions that have made this issue a success.

As per the data available with BSE,the issue received bids for 14.42 crore shares at an indicative price of Rs 60.86, generating a total investor interest worth Rs 877.6 crore. Through this auction the government has successfully brought down its holding to 90 per cent.

While the shares of the company closed at Rs 211.5 on Wednesday,the offer at a floor price of Rs 60 was at a discount of 72 per cent. The company saw its shares decline by 10 per cent on Thursday to close at Rs 190.40.

Merchant bankers say that the heavy discount was because the scrip has yet to discover its fair value. “There is virtually no trading in the stock and it has low free float,so price discovery has to be there,” said Borkakoty.

SP Tulsian,an independent market expert said that the shares of the company were artificially priced till now and there was low free float available.

MMTC has done it but 11 public sector companies have yet to comply with the minimum public shareholding norm of 10 per cent by August 2013.

For all the latest News Archive News, download Indian Express App

Advertisement
Advertisement
Advertisement
Advertisement