Power Finance Corporation's stake sale fully subscribed

The government's 5 per cent stake sale on Monday in power sector lender Power Finance Corporaton got fully subscribed with strong demand coming in from institutional investors.

However, retail demand was tepid with the portion reserved for them getting subscribed 43 per cent so far.

PFC is the second public sector unit (PSU) to be divested in the current fiscal under the government's disinvestment programme.

In April, Government had sold 5 per cent stake in Rural Electrification Corporation(REC) for Rs 1,550 crore.

The share sale, which began at 9:15 am, received good response from institutional investors and portion reserved for them was subscribed 1.34 times by 11:35 am.

The portion reserved for the retail investors, who are also getting 5 per cent price discount, was subscribed 43 per cent, as per the stock exchange data.

Overall, the offer was subscribed 1.16 times and the subscription may rise further during the day as bidding will continue till 15:30 hours.

With the successful sale of 6.60 crore shares in PFC through a one-day offer for sale (OFS) route at a floor price of Rs 254 apiece, the government may get over Rs 1,600 crore.

The floor price of Rs 254 a share was at a discount of 2.14 per cent over Friday's closing price of Rs 259.55.

At present, government holds 72.80 per cent equity in Power Finance Corporation. After sale of 6.60 crore shares representing 5 per cent stake on offer, government's holding will be reduced to 67.80 per cent.

PFC is the first disinvestment under the modified OFS rules of Sebi under which companies are allowed to disclose stake sale plans two 'banking' days ahead of the issue.

The Department of Disinvestment had approached Sebi in March saying they do not want trading days in-between the announcement and stake sale.

Earlier, the companies were required to give an advance notice of two trading days before the OFS, which the government says gave scope for speculators to beat down the share price of the disinvestment-bound PSU.

The Department has a Rs 69,500-crore target from PSU disinvestment in the current fiscal, of which Rs 41,000 crore would come from minority stake sale and Rs 28,500 crore from strategic stake sale.

As much as 20 per cent of the issue size is reserved for retail investors and 25 per cent for mutual funds and domestic insurance companies.

The remaining portion is left for institutional investors, which are usually lapped up mostly by domestic financial institutions and foreign funds.