Disinvestment begins, govt to sell 5% in REC

In the first disinvestment in 2015-16, the government on Wednesday said it would sell 5% stake in Rural Electrification Corporation at Rs 315 a share to mop up over Rs 1,550 crore.

In the first disinvestment in 2015-16, the government on Wednesday said it would sell 5% stake in Rural Electrification Corporation at Rs 315 a share to mop up over Rs 1,550 crore.

The floor price of Rs 315 a share, which is at a discount of 2.07% on the closing price of Rs 321.65 on the Bombay Stock Exchange, was decided at a meeting headed by finance minister Arun Jaitley on Tuesday.

The offer will take place during trading hours at a separate window of the stock exchanges on April 8 between 9.15 am and 3.30 pm, REC said.

As many as 4.93 crore shares will be on sale, of which 20% would be reserved for retail investors who can bid for shares worth Rs 2 lakh. They would be offered shares at 5% discount to issue price.

Besides, 25% of the offer would be allotted to mutual funds and insurance companies.

REC would be the first public sector unit to hit the market in the current fiscal year. The government has budgeted to raise Rs 41,000 crore through minority stake sale in 2015-16.

The disinvestment department has a pipeline of companies in which to sell minority stakes to avoid bunching up of the process towards the end of end of the fiscal.

The companies which have been lined up for disinvestment include Bhel, Dredging Corporation, Nalco, IOC and NMDC.

"It is not healthy to bunch stocks towards the end of the fiscal because then you cannot watch the market, and there is limited depth in the market. So one may not get the full worth also. We will not be bunching them together," disinvestment secretary Aradhana Johri had said earlier.

JM Financial, Morgan Stanley and IL&FS Broking Services are acting as merchant bankers to the REC issue.

In 2014-15, the government had raised about Rs 24,500 crore through disinvestment.