<i>Acche Din</i> for EIL; OFS oversubscribed 2.54 times letting govt earn 637 crore

At last there is some good news for the government on the disinvestment front as long awaited (EIL) OFS got overwhelming response from the investors, particularly retail ones and offer was oversubscribed 2.54 times. This was the first OFS by the government in the last quarter of current fiscal and would certainly give some respite to the government that will surely fail to achieve current fiscal’s disinvestment target of Rs. 69500 crore. Due to weak market conditions government is able to mop up just Rs. 12700 crore till now and EIL OFS would fetch Rs 637 crore at a floor price of Rs 189.

EIL OFS comprised of an offer of 10 per cent paid up capital comprising 33693660 shares. Government has reserved 20 per cent shares for the retail investors and additional 5 per cent discount was also offered to them on price bid. OFS will bring down government share in the company to 59.37 per cent. Riding high on the valuation of company, OFS received total subscription of Rs 1641.52 crores, making the issue oversubscribed by 2.54 times on January 29. Importantly, despite volatility in the markets, investors’ enthusiasm was witnessed for the issue and indicative price for OFS was Rs 190.63 which is above the floor price. Previous day closing price was Rs 194.05 (BSE)/ Rs 193.65 (NSE) and floor price was fixed at Rs 189.

Retail investors have made a comeback for the issue and retail portion was oversubscribed 3.92 times, amounting to Rs 513.08 crores whereas non retail participation was an impressive 2.20 times amounting to Rs 1128 crores. Importantly, all the categories have shown oversubscription with insurance companies topping the chart with subscription of Rs 583 crore where as FII response was not that encouraging with just Rs 86.75 crore subscription.