Government's 10 percent stake sale in Indian Oil Corp (IOC) kicked off on Monday with some demand coming in from retail investors in initial trade amid hefty sell-off in broader market. The government is looking to raise about Rs 9,302 crore from sale of 24.28 crore shares in IOC through a one-day OFS route at a floor or minimum price of Rs 387 a piece. The IOC share sale is the fourth disinvestment this fiscal but the biggest in 2015-16 so far.
The sale, which began at 0915 hours, received some subscription from the retail investors, who are also getting 5 percent price discount. As against 4.85 crore shares reserved for them, bids for over 2.86 lakh shares came in at 1025 hours as per the stock exchange data. However, institutional investor response have been dull so far.
The subscription may rise further during the day as bidding will continue till 1530 hours. IOC scrip slipped below the floor price of Rs 387 a share for the OFS and were trading at Rs 379.75, down Rs 14.70 or 3.73 percent over previous close on BSE. The fall in IOC scrip is in line with the broader market trend which witnessed a sharp decline soon after opening.
The BSE Sensex fell over 1,000 points to 26,318 in the morning trade. At the floor price, if the issue is fully subscribed the government, after considering 5 percent discount being offered to retail shareholders, will garner about Rs 9,302.21 crore. The government holds 68.6 percent interest in IOC. In the current fiscal it has sold stakes in three PSUs PFC, REC and Dredging Corporation getting over Rs 3,300 crore. The IOC stake sale will, however, dwarf in front of Rs 22,557 crore that the government raised through a stake sale in Coal India Ltd last year. The government is targeting to raise Rs 69,500 crore from disinvestment in the current fiscal.
Indian Oil Corporation (IOC) is the nation's biggest oil refining and marketing company with 54.2 million tonnes of refining capacity or roughly one-fourth of India's total refining capacity of 215.1 million tonnes. Besides, it owns and operates 24,405 petrol pumps, a little less than half of India's 53,419 filling stations. At least 20 percent of the offer size has been reserved for retail investors, who will also get a 5 percent discount to the cut-off price, according to the offer document.
Retail investor has been defined as an individual investor who places bids for shares of total value of not more than Rs 2 lakh aggregate. Five bankers handling the share shale are CitiGroup, Deutsche Equities, Nomura, JM Financial and Kotak Securities.
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