The Hindu Business Line : PSU public offers: Investors pour in Rs 12,600 crore

NEVER has so much money come into so few public issues in so short a span of time, as has happened during the past three weeks. A whopping Rs 12,600 crore were poured into a slew of offers by retail and high net worth investors.

These PSUs, excluding ONGC, were seeking to mop up about Rs 2,000 crore from these investors, for whom 50 per cent of the offer had been set aside.

The ONGC offer is targeting to rake in another Rs 4,000 crore from retail and high net worth investors. As of Friday night, the retail response to the ONGC offer seemed muted. Yet, the sum subscribed to the public offers along with their likely investment in ONGC might exceed household investment in shares in any year in the capital market history of India. According to statistics put out by RBI, household savings in shares, mutual funds and debentures touched a high of Rs 18,119 crore in the year ended March 2000, bulk of which were in mutual funds.

A consequence of the overwhelming response is that a sum of over Rs 10,000 crore will have to be refunded to retail and high net worth investors. Where are these refunds headed? Will retail investors be headed for the secondary markets? No, says Mr Jagdish Master, Director of Enam Securities. He said that only high net worth investors might invest in the secondary markets. Mr Master was of the opinion that retail investors would seek out only public offers.

He indicated that for the Power Trading Corporation issue alone, his company has processed more than 6,00,000 applications. Enam Securities has processed about 12 to 15 per cent of the total collection in these offers, he stated.

On the contrary, Mr Motilal Oswal, Chairman and Managing Director of Motilal Oswal Securities suggests that given the prevailing low interest rates, investors have no option but to invest a portion of the refunds in the stock market. Motilal Oswal Securities has processed about 1-lakh applications for the public offers, he added.

Mr. C.J. George, Managing Director, Geojit Financial Services, which has processed about 30,000 applications for the public offers, offered another view.

According to him, some of his clients have been asking if they should buy into stocks of the very same PSUs that have hit the market with their offers. His advice to them, he said, would depend on the price at which these shares trade after the allotment. One aspect on which all three agreed was that the appetite for good quality public offers will continue to be strong.

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