MMTC share sale oversubscribed; govt expects to get Rs 568 crore
The indicative price was Rs 60.88 apiece, higher than the base or minimum offer price of Rs 60 a share.
New Delhi: The government's disinvestment programme for this fiscal started on a positive note with MMTCs' Offer For Sale (OFS) getting over subscribed and fetching the exchequer around Rs 568 crore.
"The issue was oversubscribed by 1.55 times. Based on the total valid bids received, at an indicative price of Rs 60.86 as against the floor price of Rs 60 for the face value of Re one per share, the Government expects to realise proceeds of Rs 567.90 crore," the Finance Ministry said in a statement.
The Offer for Sale (OFS) of MMTC received participation from financial institutions, retail investors and some FIIs.
"The Investors category-wise participation was 65 per cent from Insurance Companies, 21 percent from Banks and 14 percent from retail investors," the Ministry added.
A total of 14.42 crore bids were received for the 9.33 crore shares (9.33 percent of total shares) put on block.
The divestment, the statement added, was done to make MMTC compliant to the public shareholding requirements under the Securities Contract Regulations (Rules) (SCRR).
The stake sale will help the company meet the 10 percent minimum public shareholding norm of market regulator Sebi. Prior to the today's disinvestment, the government held 99.3 per cent stake in the trading company.
Meanwhile, MMTC shares on the stock exchanges hit the lower circuit limit in opening trade leading to a halt in trading for full day. The scrip plunged about 10 percent to Rs 190.35 apiece on the BSE.
There is a huge difference between the floor price and the market price of MMTC as the scrip is illiquid, an official in Disinvestment Department said.
The Empowered Group of Ministers (EGoM) on disinvestment, headed by Finance Minister P Chidambaram had yesterday cleared 9.33 percent stake sale of the trading giant through OFS mechanism, popularly known as auction route.
This is the first disinvestment in the current fiscal. The government aims to raise Rs 40,000 crore from PSU stake sale in 2013-14.
Confident of achieving the target, Finance Minister P Chidambaram said: "While kicking of the disinvestment today with MMTC's 9.33 percent stake sale, I have enough time to achieve the target".
The DoD had shortlisted three investment bankers; Avendus, IDBI Capital Market Services and IDFC to manage the stake sale of MMTC.