Update: SAIL share offer over-subscribed; govt raises Rs 1,715 crore

Steel Authority of India's (SAIL) share sale was subscribed more than two times, fetching the exchequer Rs 1,715 crore and kicking-off the government's ambitious disinvestment drive.

The first disinvestment offering in the ongoing financial year saw retail investors lapping up SAIL shares taking the overall subscription to 2.08 times (42.93 crore shares) of the 20.65 crore shares on offer.

Government's stake in SAIL will come down to 75 per cent pursuant to this public issue, helping the state-run steel major to meet market regulator Securities and Exchange Board of India's (Sebi) listing norms.

The government has set a target to raise Rs 43,425 crore through stake sales in various PSU firms during the 2014-15 fiscal in a bid to plug the fiscal deficit.

The Offer For Sale (OFS) got bids for 42.93 crore aggregating to over Rs 3,400 crore but with the government not opting for the green-shoe option, only Rs 1,715 crore would come to the exchequer.

"OFS for disinvestment of 5 per cent of government equity in SAIL successfully concluded, to fetch Rs 1,715 crore approximately for the government," a Finance Ministry statement said.

The offering for SAIL shares also received a robust response from retail investors, to whom the government has offered a five per cent price discount and has reserved 10 per cent or over 2 crore shares for them.

2.06 crore shares, or 10 per cent, which were earmarked for retail investors were subscribed 2.66 times, while the general category shares were subscribed 2.01 times, according to data released by the Bombay Stock Exchange (BSE).

"Retail investors category was... Hugely oversubscribed more than 2.5 times, a record for any retail participation in any OFS," the finance ministry statement added.

A successful start to the ambitious disinvestment programme will help government contain the fiscal deficit to 4.1 per cent of the gross domestic product (GDP) in the current financial year.

The government has lined up a host of state-run firms to pare holdings - including a 5 per cent stake sale in ONGC, 10 per cent in Coal India (CIL) and 11.36 per cent in NHPC.

SAIL is probably the first OFS in which domestic bourses are showing retail and general category subscription with their respective indicative price separately.

The floor, or the minimum offer, price for SAIL's share sale has been set at Rs 83 a piece, which is 2.75 per cent less than the scrip's closing price on Thursday.