Financial Express reported that state owned insurance behemoth Life Insurance Corporation once again came to the government's rescue on Friday with a bid of approximately INR 600 crore for Steel Authority of India shares sold through an Offer for Sale.
In what looks to be the last divestment in the current financial year, LIC accounted for nearly 40% of the total bids received in the OFS which will fetch the government INR 1,517 crore.
According to bankers, foreign institutional investors bid for 20% of the issue other domestic institutions for 20% banks for10% and retail investors for 10%. Within banks SBI is believed to have put in a cheque for INR 100 crore.
The government diluted a 5.82% stake in SAIL offering 24.03 crore shares at a floor price of INR 63. According to stock exchange data the offer was subscribed 1.003 times with bids for 24.13 crore shares at an indicative price of INR 63.07 apiece. After the sale the government holding in SAIL has gone down to 80%.
With this, the government will have raised INR 23,778 crore in 2012 to 13 by selling shares in state owned companies. This is slightly lower than the scaled-down target of INR 24,000 crore and much below the original target of INR 30,000 crore for FY13.
This fiscal the government sold stakes in Nalco NTPC, Oil India, Hindustan Copper, NMDC and RCF.
Incidentally, several domestic and foreign brokerages had given a thumbs down to the SAIL auction citing high valuations coupled with a weak outlook for the domestic steel industry. According to Nomura, SAIL was trading at 7.9 times 1 year forward EV/EBITDA, a far higher valuation than steel major Tata Steel which trades at 5.8 times 1 year forward EV/EBITDA.
The SAIL auction was managed by 6 bankers JP Morgan, HSBC Securities and Capital Markets, Deutsche Equities India, Axis Capital, Kotak Securities and SBICAP Securities.