The Hindu : IPCL issue raises Rs. 1,200 cr.

Online edition of India's National Newspaper
Sunday, Feb 29, 2004

Business

Business

IPCL issue raises Rs. 1,200 cr.

By Our Special Correspondent

NEW DELHI, FEB. 28. Despite controversies over market response to the public sector initial public offerings (IPOs), the Government has managed to mop up Rs. 1,200 crores from the sale of residual equity in IPCL. Over-subscribed by nearly five times, about two lakh applications were received for the issue that generated Rs. 6,000 crores.

Disclosing this here today, the Union Disinvestment Minister, Arun Shourie, refused to let the controversy over market manipulation die down despite the good response to IPCL and other issues in the pipeline. Asked whether he was now satisfied about market response, he said a meeting was being held with merchant bankers on March 1 for the ONGC issue. "I will tell you after that,'' he responded with a smile.

Referring to the turnaround in the market in the last two days, he said the CMC issue had so far been over-subscribed about 10.4 times, the IBP issue 1.7 times, Dredging Corporation of India 1.7 times and the Gas Authority of India Ltd. issue 1.6 times. As for IPCL, which closed yesterday, he said, "This offering has received an overwhelming response from high quality international and domestic institutional investors as well as from retail investors.''

Addressing a press conference, he said after clearance from the Union Finance Minister, Jaswant Singh, the offer price had been fixed at Rs. 170 per share.

For retail investors the price would be lower at Rs. 161.50 per share as against the current market price of Rs. 188 per share. As much as 50 per cent of the allocation will be made to retail investors though 90 per cent of the demand came from qualified institutional buyers (QIBs). The balance 50 per cent were being allocated to the QIBs.

Out of the retail, nearly 30 per cent allocation had been made to individual retail investors as against the original reservation of 25 per cent.

"All such investors would receive allocation and no one will be left out,'' he said while adding that most investors would get 90 per cent of their requirements. This covers investors applying for less than Rs. 50,000 each. The high net worth individuals who comprise the balance of 20 per cent in the retail quota would also get full allocation.

Mr. Shourie said among the QIBs, preference had been given to domestic mutual funds as their underlying investors were predominantly domestic retail investors. He said in this manner, the Government had further enhanced allocation to individual retail investors.

Taking this into account, he said the total retail allocation worked out to nearly 60 per cent of the total IPO. The balance would go to foreign and domestic institutional investors. The process of actual allotment to investors would begin on March 1, he said.

The Minister said, "This is the first follow-on offering on a book built basis in the country and would set a benchmark for such deals in future. The total issue size of 71.85 million shares was oversubscribed 4.8 times.''

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