Buoyed by success of EIL offer, govt lines up 3 more selloffs

NEW DELHI: The disinvestment department is readying three more state-run firms for equity offers, confident that its formula of attractive pricing will ensure good investor response, as evident from the over 13 times subscription of the recently-concluded Engineers India offer.

The festive season sale of government stakes is likely to kick off with the year’s largest public offer by Coal India (CIL) between October 18 and 21. This is likely to be followed by offers by Hindustan Copper and Power Grid.

“There is still a little uncertainty about the exact timing of the offers but the expectation is that the offers (of Hindustan Copper and Power Grid) would be launched around Diwali. We have been told to keep everything ready,” an investment banker who is participating in one of the issues said.

Engineers India’s offer, which sought bids in Rs 270-290 price band, well below the market price of about Rs 330 a share then, is priced at the top of the bidding band (Rs 290) for the institutional investors. With a 5% discount, it works out to Rs 275.5 a share for retail investor. Such pricing is sure to attract greater investor interest in stake sales by the government, allowing it to raise the budgeted Rs 40,000 crore.

“There is no reason the planned offers will not attract investors if the market conditions sustain. They are all very good stocks,” said Jagannadham Thunuguntla, equity head, SMC Capitals, but cautioned that they would have to be priced reasonably.

Stake sales in Manganese Ore India and Steel Authority of India are likely early next calendar along with disinvestment in at least one more big company to reach the target of Rs 40,000 crore from sell-off proceeds. The department of disinvestment is in the process of appointing merchant bankers and seeking clearances for all the five issues. “We are trying to get all regulatory approvals in place so that Hindustan Copper’s FPO (follow-on public offer) can be scheduled for late October or November,” a mines ministry official said.