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The Union Minister for Disinvestment, Mr Arun Shourie, flanked by the IPCL Chairman, Mr Mukesh Ambani, and the Vice-Chairman, OM Kotak Bank, Mr Uday Kotak, at a press conference in Mumbai on Tuesday announcing the sale of Government stake in IPCL. - Paul Noronha

Mumbai , Feb. 17

MANY equity analysts expect the Government to sell part of its equity holding in IPCL at Rs 165-175 to retail investors. Institutional and other large investors will have to participate in a book building to discover the public offer price.

According to an analyst with a local broking firm, the Government may offer IPCL shares at a discount between 5 per cent and 10 per cent to the current market price to retail buyers. SEBI defines any application below Rs 50,000 as a retail bid.

The expectation of a discount drove down the petrochemical company's stock more than 2 per cent to Rs 180 on the Bombay Stock Exchange.

The Disinvestment Minister, Mr Arun Shourie, told newspersons here, and earlier in Delhi, that the Government favoured selling its equity stakes at different prices to retail and large investors.

Mr Shourie refused to disclose the rebate that the Government planned for retail buyers but said it believed in rewarding the small investor.

The Government is selling about 5.95 crore IPCL shares or nearly 24 per cent of the company's equity capital through an offer for sale that opens on February 20.

It would announce the price of the issue after market hours the previous day.

According to the sale document of IPCL, not more than 50 per cent of the issue would be available to institutional bidders and a minimum of 25 per cent each would be available to non-institutional bidders and retail investors.

After the issue, the Government would be left with about 10 per cent in IPCL of which half could be sold to the strategic partner, Reliance group, at a negotiated price.

The IPCL Chairman, Mr Mukesh Ambani, told newspersons that the Reliance group would wait for the Government to announce its public offer price and then think about negotiating a price for its 5 per cent option. Asked whether the Reliance group could participate in the public offer, Mr Ambani said even though a decision has not been taken, he did not see any reason why group companies could not bid in the non-retail category.

Mr Uday Kotak, Chairman of Kotak Mahindra Capital Company, which is one of the book running lead managers to the issue, said he was not sure whether the Reliance group could participate in the public offer. "I will have to check on that," Mr Kotak said.

More Stories on : Petrochemicals | Disinvestment | Public Offer | Investor Protection

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