IOC stake sale: LIC to the rescue again as govt mops up Rs 9,300 cr

New Delhi: The government today raised over Rs 9,300 crore from 10 percent stake sale in IOC after “calls” to institutional investors, like LIC, rescued the sale that was hit by the bloodbath in stock markets. The offer for sale of 24.28 crore shares was over subscribed by 1.18 times on an overall basis, but retail investors picked up less than one-fifth of their quota.[caption id=“attachment_2390902” align=“alignleft” width=“380”]  Mopping up cash. AFP[/caption] The share sale helped the government get about Rs 9,379 crore. The stake sale, billed as the biggest disinvestment of the fiscal so far, happened on a day when global meltdown wiped away a massive 1,624 points, or nearly 6 percent, from the benchmark BSE Sensex, dipping IOC shares to Rs 378 as against the auction floor price of Rs 387. Disinvestment secretary Aradhana Johri termed the sale as highly successful given the market conditions and said with this the government has managed the best ever first half disinvestment collections in seven years. Together with three other disinvestments since April, the government has mopped up over Rs 12,600 crore, or a little less than one-fifth of the yearly target of Rs 69,500 crore. “We are happy we have managed to get the stock which I think is intrinsically very good despite hugely adverse market conditions… The market conditions were exceedingly adverse it’s not been an easy but ultimately the issue has been over subscribed,” Johri told reporters in New Delhi. The stake sale managed to get total bids for Rs 11,107 crore for 28.74 crore shares, against the offer of 24.28 crore shares. Retail investors, who are offered shares at 5 percent discount, i.e. Rs 367.65, picked up only 18 percent of their quota of 4.85 crore shares. Institutional investors put in bids for 27.85 crore shares, or 1.43 times the 19.42 crore shares reserved for them. Asked if state insurer LIC was asked to bail out the stake sale, Johri said, “Calls are made to all investors. Right along the line calls are made to every investor by us, by our merchant bankers in a situation of crisis like this to every actor. We even spoke to stock exchanges”. On low retail participation, she said individual investors have gone by market sentiment even though the offer price for them (Rs 367.65) was lower than the price at which IOC closed (Rs 378) on the stock market today. “Adverse sentiment in market affected retail investment and there was panic in market also. That has overtaken retail investment,” Johri said. On the volatility in market affecting future disinvestment pipeline, she said, “Market is getting more and more difficult… The disinvestment target is very ambitious and it is very challenging. “We have to watch the market and relook at which stocks are available for disinvestment… We need to bring in flexibility in the timing of stake sale”.