Oil India offer a hit

Mumbai, Feb. 1: The government today raised more than Rs 3,000 crore by divesting a 10 per cent stake in Oil India through the offer-for-sale (OFS) route.

The issue, which had 6.01 crore shares of the navratna company on offer, was subscribed over 2.5 times. The floor price of Rs 510 per share was at a discount of 5 per cent to the closing price of Oil India stocks on the BSE on Thursday.

According to details available with the NSE, the issue attracted bids for over 15.41 crore shares and the indicative price came at Rs 517.99, which would have fetched the exchequer over Rs 3,110 crore.

The OFS mechanism was introduced by the Securities and Exchange Board of India last year to help promoters bring down their stake in their listed companies to levels that ensure a public holding of at least 25 per cent.

In its board meeting last month, the market regulator made some changes to this method by giving institutions the additional option of submitting bids for shares without having to put up a 100 per cent upfront margin.

Sebi offered two options to institutional investors. Under the first option, they will be allowed to submit bids backed by a 100 per cent upfront margin, which will give them the right to modify or cancel their orders at a later stage.

Under the second option, introduced later, institutions may place orders without the upfront margin. But they will not be allowed to modify or cancel these orders.

Data on the Oil India OFS show that there were bids for 7.50 crore shares under the first option and over 7.91 crore shares under the second.

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