QIBs aid NMDC share issue
The big-ticket NMDC follow-on public offer (FPO), through which the government plans to raise up to Rs 11,628 core at the upper end of pricing, neared full subscription on Thursday.business Updated: Mar 11, 2010 21:20 IST
The big-ticket NMDC follow-on public offer (FPO), through which the government plans to raise up to Rs 11,628 core at the upper end of pricing, neared full subscription on Thursday.
The FPO, which received a lukewarm response on its opening day on Wednesday, witnessed demand from the qualified institutional buyers (QIBs) for the issue and saw its total subscription touch 79 per cent by Thursday 5 pm.
Institutional investors like LIC invested into the FPO on Thursday.
“Several domestic institutions invested into the issue along with LIC and SBI and couple of foreign institutional investors (FIIs),” said a source close to the development. “The issue will get fully subscribed as several other FIIs and mutual funds along with private sector banks are expected to subscribe tomorrow.”
The QIB portion of the issue received subscriptions of 1.55 times, helping the issue to get close to full subscription. The issue received very weak response from the retail segment as the retail portion of the issue received subscription of only 2.8 per cent till Thursday evening.
While the issue has been priced between Rs 300 and Rs 350, the demand graph at the NSE website suggest that most of the subscriptions received till Thursday 5 pm have been at the lower end of the price band.
The share price of NMDC fell by over 5 per cent on Thursday to close at Rs 360 at the Bombay Stock Exchange.
Generally, the share price of a stock tracks the allotment price of the issue and since most of the subscriptions received are at the lower end of the issue and it is likely that the allotment will be at the lower end of price band, the share price of the stock is in a mode of correction, said a market expert.
The issue is the third follow on public offering where the government is divesting its stake.