OM:India raises Rs6.1b through Hindustan Copper stake sale
MUMBAI India raised Rs6.1 billion by selling 4 per cent of state-run Hindustan Copper in a share auction on Friday, kickstarting a stalled divestment programme that is crucial to rein in a ballooning fiscal deficit.
The auction generated bids for 38.9 million shares, stock exchange data showed. The government had offered 37.01 million shares, or 4 per cent of the company, but had the option to sell a further 51.71 million shares.
The bids came at a weighted average price of Rs156.81, stock exchange data showed, slightly above the Rs155 floor price.
The government owns 99.59 per cent of Hindustan Copper, and the limited free float had inflated the traded price of the shares. The stock fell about 20 per cent, its daily limit, on Friday to 212.95 rupees.
Life Insurance Corp of India and State Bank of India were among the bigger buyers of shares, two sources directly involved with the process said, an indication of limited interest from private sector investors.
New Delhi aims to raise Rs300 billion through share sales in state companies in the fiscal year ending in March, but has managed just 1.25 billion rupees so far, through an IPO by National Buildings Construction Corporation. Weak market conditions have deterred public issues or auctions. The Indian government raised Rs140 billion through share sales in the previous fiscal year, less than half its Rs400 billion goal.
Earlier this month, the government pushed back a decision to sell a stake in state-run National Aluminium, in a deal that could have raised about $270 million. Last month, state steelmaker Rashtriya Ispat Nigam shelved an IPO due to disagreement with bankers over pricing, sources with direct knowledge of the matter said.
The government has lined up stake sales in miner NMDC and explorer Oil India before December 20, an official said.
Axis Capital, ICICI Securities, Kotak Securities, SBI Capital and UBS were the lead managers for the Hindustan Copper sale. Though the minimum target for the government is to divest four per cent of its 99.59 per cent stake in HCL, the offer size can go up to 9.59 per cent if investors respond well.
