Government to divest 5 per cent in Container Corp via OFS

Government owned logistics major Container Corp (CONCOR) in a stock exchange filing informed about selling 5 per cent stake via OFS (Offer For Sale) route on Wednesday. The floor price for the issue has been set at Rs 1195.

The government through the OFS is likely to offer 97,48,710 equity shares representing 5 per cent of the total paid up equity share capital of the company on March 9, 2016 for institutional investors and March 10, 2016 for retail and non-retail investors who choose to carry forward their bids for the same through a separated designated window on both NSE and BSE. The government is looking to raise Rs 1165 crore from the OFS. CONCOR is the second company to hit the markets under the revised OFS guidelines formulated by market regulator SEBI. The OFS route has now been spread over two days.

20 per cent of the total offer size is reserved for retail investors. An unsubscribed portion of the shares reserved for the retail investors will be allotted to the investors in the non-retail category opting to carry forward their bids on T+1, and those that have not been allotted shares on trading day. Retail investors will be allocated offer shares at a 5 per cent discount to the cut-off price i.e. price derived after applying discount to the cut-off prices.

Lead brokers for the offer are Kotak Securities, ICICI Securities and Citigroup Global Markets India.

Government recently in February sold 5 per cent stake in NTPC. In the past few months the government had offloaded stake in EIL (Engineers India Limited) and host of other PSUs. CONCOR will be the seventh PSU to hit markets in the current fiscal. Others being NTPC, EIL, Indian Oil Corp, PFC, REC and Dredging Corporation.

The CONCOR share sale if successful, will help government to scale towards its revised disinvestment target of Rs 25000 crore. The Centre through Railway Ministry currently holds 61.80 per cent stake in the logistics company.

CONCOR was trading below its base price of Rs 1195 for the OFS. Shares declined more than 2.90 per cent in early trade on NSE.

Government in the current fiscal 2015-16 has to revise its disinvestment targets owing to adverse market conditions which had made the raising of funds through share sale a difficult task. Government disinvestment targets have also been poorly affected by a commodity crash, which has made the commodity related company’s valuation cheaper than their actual value accounted for during the time of budget 2015-16. Recent swings in the stock market have also prompted the government to delay some stake sales as it does not want to sell too cheaply.