A Record 902% Oversubscription Amounting to ₹ 2887 Crore; FII Participation Stood at Impressive ₹ 1692 Crore or 20.71% of the Subscribed Amount

The First CPSE disinvestment for the fiscal year 2015-16 got off to a thumping start today with the Rural Electrification Corporation (REC) OFS getting fully subscribed within one and a half hour of opening.

 On offer was 5% paid-up capital of the company comprising 4, 93, 72,950 shares, each of Face Value of ₹ 10. Out of the shares offered for sale, 20% were reserved for retail investors i.e. those investors who placed bids for shares of total value of not more than ₹ 2.00 lakh. In addition, a 5% discount was also offered to retail investors on price bid.

 With this disinvestment, the Governemnt of India share in REC will come down to 60.64%.

 At the end of the day with total subscription of ₹ 7621 crore, the issue stood oversubscribed by 553%, the highest ever for an OFS.

 The investor enthusiasm for the issue is borne out by the fact that the indicative price for retail was ₹ 325.10 and for institutions ₹ 324.73 both above the previous day (7/4/2015) closing price of ₹ 321.65 and floor price of ₹ 315. Seldom, if ever, has such an upward spiral been registered by an OFS.

 The highlight of the issue has been the overwhelming retail investor participation, a record 902% oversubscription amounting to ₹ 2887 crore. If we add retail bids through Mutual Funds then with ₹ 528 crores, the total amount subscribed by retail investors adds up to ₹ 3415. Significantly against a discount of 5.3% to the last traded price for the previous REC transaction in the 2010 FPO, the discount this time was only 2.1%

 The OFS has been equally strongly endorsed by the institutional investors. At ₹ 4734 crore, it was oversubscribed by 466%, once again the highest ever for an OFS.

 The FIIs participation stood at impressive ₹ 1692 crore or 20.71% of the subscribed amount.

Disinvestment saw reserved retail allotment with substantial oversubscription and strong FII participation levels. Disinvestment via an offer for sale of 5% paid-up capital reserved 20% for retail bidders with a 5% retail discount, reducing Government shareholding to 60.64%. The issue recorded record demand: retail oversubscription of 902%, institutional oversubscription of 466%, strong aggregate oversubscription for an OFS, and foreign institutional investors accounted for 20.71% of the subscribed amount.