SAIL share sale oversubscribed within hours

The government's offer for sale of a five-per cent shares in Steel Authority of India (SAIL), the first PSU stake sale by the new government at the centre, has been oversubscribed, stock exchange data showed.

The offer of 206.5 million shares worth around Rs1,700 crore, received bids for 306.0 million share, according to exchange data.

The SAIL share offer was subscribed 0.61 times as of 1.55 pm IST today, as per stock exchange data. The retail portion was subscribed 0.53 times, while the non-retail portion was subscribed 0.62 times.

The government on Thursday set the floor, or the minimum offer price, for SAIL shares at Rs83 apiece, which is a 2.75 per cent discount to its previous closing price.

On the Bombay Stock Exchange (BSE), the SAIL scrip hit a low of Rs83.90, down 1.70 per cent over its previous close. It traded in the range of Rs84.70 to Rs83.50 in early trade, which was higher than the floor price.

At the floor price of Rs83, the 20,65,26,264 shares of Rs10 face value shares are worth around Rs 1,714.16 crore ($285 million) at current prices, on Friday.

The government targets to raise Rs43,425 crore through its ambitious disinvestment programme in various state-owned firms during the current financial year.

As much as 10 per cent of the shares on offer has been reserved for retail investors, who can buy stocks worth a maximum Rs2 lakh in the share sale. They are also entitled to a 5 per cent discount on the bid price.

A minimum of 25 per cent of the issue size is reserved for mutual funds and insurance companies.

The Cabinet had in July 2012 approved a 10.82 per cent stake sale in SAIL. Accordingly, the first tranche of disinvestment of 5.82 per cent was completed in March 2013, which fetched over Rs1,500 crore.

The government currently holds 80 per cent stake in the company and this would come down to 75 per cent after the current round of stake sale.

Axis Capital Ltd, Deutsche Equities India Pvt Ltd, HSBC Securities and Capital Markets (India) Pvt Ltd, J P Morgan India Pvt Ltd, Kotak Securities Ltd and SBICAP Securities Ltd will sell the securities on behalf of SAIL.