Expect more divestments post Budget: Deutsche Bank

A: It was a combination of various things. First of all the discount was reasonable for such a large issuance; to have this kind of discount was very reasonable. Secondly, the government managed to keep the timing of this offer confidential from the market and so, there was limited overhang on it.

Thirdly, to split it into two in terms of base deal size of 5 percent and another 5 percent oversubscription also helped because investors kept guessing whether the deal would be 2 billion or 4 billion.

Another encouraging thing was the retail response to the offer, while USD 310-320 million has come in retail, you would have noticed there were about 1.7 lakh bids which came in retail and it should be looked at in a context that this is just a one-day trade.

If you compare it with IPOs which are about ten days of marketing, three days of IPO time even then getting a 1.7 lakh applications is a big thing.Q: What would you attribute the overwhelming retail participation to? Is it the fact that you have got market at record highs and everyone is bullish about what is going to happen with the Indian equity markets, is that what you believe has lured the retail participation?

A: One is that of course, but the other thing is in a listed stock when the market price is already available and people take a call whether to buy from the market or from an OFS the 5 percent discount certainly helps. So, from retail perspective, the 5 percent discount of Rs 15 or Rs 17 is a big thing if somebody is applying for 100 shares as against an institutional investor for whom it may not be that substantial.

Q: Foreign institutional investor (FII) participation, we just heard the secretary talk about the overwhelming FII participation as well. How difficult was it to sell the story to foreign investors?

A: It was as expected, given a day when the markets were weak, the markets were 1.6-1.7 percent down to get a billion dollar plus demand from FIIs was a good thing. Of course the company’s fundamentals matter but this was more driven by India story and the fact that we are moving in the right direction. That was more driving the fact that it is a large cap stock, the fact that the float is going to double which will possibly have impact over a course of time over the various indice weightages. All that was more technical terms rather than saying that it was only dependent on the fundamental for Coal India.

Q: We just heard from the secretary saying that we could expect more action on the disinvestment front. The question now is can they do another big issue like ONGC, would it be a good idea to try and put ONGC through because clearly the fundamental constraints are concerned that don’t seem to have weighed on Coal India and maybe the government will hope that the concerns lingering on ONGC will perhaps be put aside by the markets if they do decide to push through with the ONGC stake sale?

A: I would like to believe that yes, you will have more disinvestment. But the government and the disinvestment department has kept the whole time line very confidential.

I am not sure on the bankers, I am not sure on ONGC but even if I was I would not have been in a position to really estimate when the deal will happen but my sense is that maybe post Budget there is a window available.

This is because right now companies will announce the December results by February 14 and then between that and the Budget there is not enough time. So the two windows are February 14 to Budget and then after the Budget.