REC share sale subscribed 5 times, govt to receive Rs 1,550 cr

The government's ambitious divestment programme for the current fiscal began on a strong note on Wednesday, with the sale of 5 per cent stake in state-run REC getting subscribed over five times, fetching an estimated Rs 1,550 crore to the exchequer.

On strong institutional and retail demand, bids were received for over 25.24 crore shares as against 4.93 crore shares on offer, resulting in over-subscription of 5.11 times.

At the floor price of Rs 315 apiece, the government would raise over Rs 1,550 crore from the Offer For Sale (OFS).

The share sale received strong response from retail and institutional investors and was fully subscribed within an hour of its opening. The portion reserved for retail investors, who are also getting a 5 per cent discount, was subscribed 8.81 times, as per the stock exchange data.

The general category portion was over-subscribed 4.19 times. As against a floor price of Rs 315 a share for the OFS, REC shares closed at Rs 330.05, up 2.61 per cent over previous close. The government holds 65.64 per cent stake in REC.

As much as 20 per cent of the offer size was reserved for retail investors, who can bid for shares worth Rs 2 lakh. Besides, 25 per cent of the offer would be alloted to mutual funds and insurance companies. REC is the first PSU to hit the market in the current fiscal.

The government has budgeted to raise Rs 41,000 crore through minority stake sale in 2015-16. In 2014-15, government had raised about Rs 24,500 crore through disinvestment against the target of Rs 43,425 crore.

The disinvestment department has a pipeline of companies to sell minority stake to avoid bunching up of disinvestment towards the end of the fiscal. The companies which have been lined up for disinvestment include BHEL, Dredging Corporation, NALCO, IOC and NMDC. J M Financial, Morgan Stanley and IL&FS Broking Services are acting as merchant bankers to the REC issue.