Engineers India OFS oversubscribed 2.54 times, fetches govt Rs640 crore

Government on Friday raised Rs640 crore through sale of a 10-per cent stake in Engineers India Ltd (EIL), with its offer for sale (OFS) getting oversubscribed by an impressive 2.54 times.

The finance ministry in a statement said the first stake sale in the January-March quarter got off to a "thumping start today" with total subscription of Rs 1,641.52 crore, with a subscription of 2.54 times.

The first CPSE disinvestment of the last quarter of the fiscal year 2015-16 also brought cheers to market.

On offer was 10 per cent paid-up equity capital of the company comprising 33,69,36,600 shares, of face value Rs5 each. Out of the shares offered for sale, 20 per cent were reserved for retail investors, ie, those investors who placed bids for shares of total value of not more than Rs2 lakh. In addition a 5 per cent discount was also offered to retail investors on price bid.

With this disinvestment, the government's share in EIL will come down to 59.37 per cent.

At the end of the day with total subscription of Rs1641.52 crore the issue stood oversubscribed by 2.54 times.

The investor enthusiasm for the issue is borne out by the fact that the indicative price for was Rs190.63, which is above the floor price. The stock closed the previous day (28 January) at Rs194.05 on the Bombay Stock Exchange (BSE) and Rs193.65 on the National Stock Exchange (NSE) and floor price was fixed at Rs189.

The highlight of the issue has been the overwhelming retail investor participation of 3.92 times amounting to Rs513.08 crore. The non-retail participation was an impressive 2.20 times, with subscriptions totalling Rs1128 crore.

With EIL disinvestment, the government's PSU stake sale kitty so far this fiscal has swelled to Rs13,340 crore. PSUs which have been divested this year include IOC, PFC, REC and Dredging Corp.

For the full fiscal, the government had budgeted to raise Rs69,500 crore. Of the target, Rs41,000 crore was to come from minority stake sale in PSUs and another Rs28,500 crore from strategic stake sale.