HCL tanks 20% as Govt gifts 5.5% stake at huge discount
25 Nov 2012 4:32 AM IST
Kick-starting the disinvestment process of this year, the government on Friday sold 5.58 per cent stake in Hindustan Copper Ltd (HCL) for about Rs 808 crore at an average price of Rs 156.56 apiece, with bulk of the bids coming from Life Insurance Corporation (LIC) and PSU banks.
Shares of Hindustan Copper Ltd, however, tanked 20 per cent to hit its lower circuit limit on the BSE on Friday. Following the slump in the share price, the market capitalisation of the company shrunk by a whopping Rs 4,925 crore to Rs 19,711 crore in just a single trading session. On Thursday, the market worth of the company had stood at Rs 24,636 crore on.
Encouraged by the response to the first stake sale in the current financial year, Finance Minister P Chidambaram expressed the hope that government would able to garner the targetted Rs 30,000 crore in 2012-13 through disinvestment.
The government had planned to dilute its stake by 4 per cent in the copper major through offer-for-sale route, with an option of selling an additional 5.9 per cent. On Thursday, the government had set the floor price of Rs 155 a share.
It received bids for 5,16,11,858 shares, representing 5.58 per cent stake in the company, at an average price of Rs 156.56 per share. ‘The approximate gross receipts from the issue is Rs 808 crore,’ said and official release.
After the share sale, government’s equity in Hindustan Copper would come down to about 94 per cent. The bulk of the equity, according to market sources, was picked up by Life Insurance Corporation (LIC) and State Bank of India (SBI).
The early response to the stake sale, which started at 0915 am, was lukewarm. It gathered momentum towards the closure of the issue, sources said.
The share sale took place on separate windows of the stock exchanges – the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
Disinvestment Secretary Haleem Khan said institutional investors participated in the issue but the details would be known only on Monday. ‘We went to the market with a 4 per cent target and got bids for 5.58 per cent. I don’t think it can be considered a failure,’ Khan told reporters.
‘I think it should be considered as good success, keeping in view the market conditions...(and) that shares are illiquid,” he added.
The government plans to sell up to 9.59 per cent of its 99.59 per cent stake in the company through the offer for sale route, if it feels the response is good.
Shares of Hindustan Copper Ltd, however, tanked 20 per cent to hit its lower circuit limit on the BSE on Friday. Following the slump in the share price, the market capitalisation of the company shrunk by a whopping Rs 4,925 crore to Rs 19,711 crore in just a single trading session. On Thursday, the market worth of the company had stood at Rs 24,636 crore on.
Encouraged by the response to the first stake sale in the current financial year, Finance Minister P Chidambaram expressed the hope that government would able to garner the targetted Rs 30,000 crore in 2012-13 through disinvestment.
The government had planned to dilute its stake by 4 per cent in the copper major through offer-for-sale route, with an option of selling an additional 5.9 per cent. On Thursday, the government had set the floor price of Rs 155 a share.
It received bids for 5,16,11,858 shares, representing 5.58 per cent stake in the company, at an average price of Rs 156.56 per share. ‘The approximate gross receipts from the issue is Rs 808 crore,’ said and official release.
After the share sale, government’s equity in Hindustan Copper would come down to about 94 per cent. The bulk of the equity, according to market sources, was picked up by Life Insurance Corporation (LIC) and State Bank of India (SBI).
The early response to the stake sale, which started at 0915 am, was lukewarm. It gathered momentum towards the closure of the issue, sources said.
The share sale took place on separate windows of the stock exchanges – the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
Disinvestment Secretary Haleem Khan said institutional investors participated in the issue but the details would be known only on Monday. ‘We went to the market with a 4 per cent target and got bids for 5.58 per cent. I don’t think it can be considered a failure,’ Khan told reporters.
‘I think it should be considered as good success, keeping in view the market conditions...(and) that shares are illiquid,” he added.
The government plans to sell up to 9.59 per cent of its 99.59 per cent stake in the company through the offer for sale route, if it feels the response is good.
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