NBCC share sale subscribed over 150 per cent
22 October 2016
The government's offer for sale of 15 per cent equity in National Building Construction Corporation (NBCC) got oversubscribed 1.54 times in non-retail category and 1.50 times in retail category in the two days of sale on the BSE and the NSE.
On offer comprising 9,00,00,000 shares, each of Rs2 face value, out of which, 20 per cent were reserved for retail investors. The floor price was fixed at Rs.246.50 as the closing price on 19 October 2016 stood at Rs253.00 on the BSE and Rs253.30 on the NSE.
As per the new Sebi guidelines, only non-retail investors were allowed to place bids on 20 October 2016 (T-Day) while non-retail portion, investors were allowed to bid on 21 October 2016 (T+1 day).
The retail investors bid on Friday (T+1) for 20 per cent of the portion reserved for them, ie, 1,80,00,000 equity shares of a total value of Rs443.70 crore at floor price. They had the option to place a price bid or opt for bidding at cut off price.
The new arrangement provides retail investors the benefit of discovering the cut off price of T-Day and place their bids on T+1 day on a more informed basis than was the case earlier. Retail investors, who can place bids for shares of total value of up to Rs2,00,000, are also entitled to a 5 per cent discount. The discount to retail investors shall be applicable to bids received today (T+1).
With this disinvestment, the government share in NBCC will come down to 75 per cent.
The share sale saw encouraging FII participation with Rs369.21 crore worth of bids, which works out to be 21 per cent of the non-retail basket.
Total subscription stood at Rs3,098 crore against Rs2218 crore (at floor price) taking subscription to the NBCC OFS to 1.4 times.
This is the sixth CPSE disinvestment of the current financial year (2016-17). Government expects to raise around Rs2,200 crore through sale of the 15 per cent equity in state-owned NBCC.
The government had, in July, cleared a proposal to sell stake in NBCC India as part of its efforts to meet the ambitious Rs56,500-crore PSU disinvestment target in 2016-17.
The share sale will also help the company meet SEBI's listing requirement of having a minimum public holding of 25 per cent.
NBCC was listed on the bourses in 2012, ahead of the Sebi revising listing norms, when the government diluted 10 per cent stake to raise Rs127 crore. The price band of the NBCC IPO was fixed at Rs90-106 per share at that time.
Shareholders of NBCC had, in May this year, approved a stock split - from Rs10 shares to Rs2 shares - to facilitate the FPO under the governments disinvestment programme.
NBCC undertakes project management consultancy, which is its core area of focus in implementation of projects with quality, speed, economy and safety, incorporating maximum green features and ensuring sustainability.
It also undertakes engineering procurement and construction contracts, which encompass detailed design engineering; procurement and expeditious execution of projects with proper construction management, quality assurance and training.
Besides, NBCC is also active in the real estate segment since 1988 executing real estate projects - both commercial and residential. The company, of late, has ventured into re-development of properties for the government.