SAIL stake sale begins; subscribed over 27% in early trade

The government's 5 per cent stake sale in steel major SAIL, to raise up to Rs 1,700 crore, began today and got subscribed over 27 per cent in morning trade.

The total issue of 20.65 crore shares got bids for 5.7 crore shares by 1055 hours, as per the NSE data.

The retail category of 2.06 crore shares got bids for over 16.5 lakh shares (8 per cent) while the general category of about 18.6 crore shares were subscribed nearly 30 per cent.

The SAIL offering is the first PSU share sale undertaken by the new government, which targets to raise Rs 43,425 crore through selling stakes in various state-owned firms during the current fiscal.

The floor, or the minimum offer, price for SAIL's share sale has been set at Rs 83 apiece, which is 2.75 per cent less than yesterday's closing price.

On the BSE, the company's scrip hit a low of Rs 83.5, down 2.17 per cent over its previous close, soon after the start of market hours today.

It continued to trade in the range of Rs 84.70-83.50 in early trade, which was higher than the floor price.

At the floor price of Rs 83, a 5 per cent stake or over 20.65 crore shares in SAIL could garner around Rs 1,714 crore to the exchequer.

The government currently holds 80 per cent stake in the company.

As much as 10 per cent of the offered shares have been reserved for retail investors, who can buy stocks worth up to Rs 2 lakh in the share sale. A minimum of 25 per cent of the issue size would be reserved for mutual funds and insurance companies.

Also, a 5 per cent discount on the bid price would be given to retail investors.
The Cabinet had in July 2012 approved 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 Rs 1,500 crore to the exchequer.

The government has lined up a host of PSUs to pare its holdings. The disinvestment plan includes 5 per cent stake sale in ONGC, 10 per cent in Coal India and 11.36 per cent in NHPC.

HSBC Securities, Deutsche Equities and J P Morgan India are among the six merchant bankers advising the SAIL stake sale.

While the new government assumed power in late May, there have been no PSU share sales so far in the current fiscal.

During the previous 2013-14 fiscal, the government had raised over Rs 16,000 crore through disinvestment of PSUs