Financial Daily from THE HINDU group of publications
Saturday, Mar 20, 2004
Financial Daily from THE HINDU group of publications Saturday, Mar 20, 2004 |
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Markets
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Public Offer Columns - Say Cheek Minister with appetite in hungry market D. Murali
ADVANI'S Rath Yatra is moving at a snail's pace compared to ONGC's IPO yatra. The issue blew like a gale wind, and before people could digest the size of the issue, it got oversubscribed, and now they have also fixed its price at Rs 750. But, as usual, there is the common man whose well of questions is overflowing. How big is the company? The market capitalisation of ONGC has reached a level that is one-half of Pakistan's Gross Domestic Product, according to the Minister, Arun Shourie. What happened? To tell you the whole story, Oil and Natural Gas Corporation Ltd (ONGC) that started off as "a modest entity in the serene Himalayan settings" is a PSE (that is, public sector enterprise) making good profit. As part of the disinvestment programme, the government has been selling shares of many PSEs to the public. The ONGC issue that hit the market in recent days was the biggest-ever in Indian history, with a size of Rs 10,000 crore that made people wonder if there would be buyers. But it got sold out in 11 minutes, after which when it was still on the shelves, they didn't put the `sold' tag on it, so for every share at least six people were queuing up. Never saw the queue, but so much money? That came as a surprise to experts also, because nobody knew how much money would come out chasing the shares. So, it now looks like there are more suitors than brides. "People have money. The world has money. Everybody wants to invest in India," is a Shourie quote that would explain that he too didn't anticipate the size of the market appetite. Economists and accountants are still trying to tally the cashflow but they are still stuck about the `sources' and so are asking where the money was all these days. Is he hungry also? It seems so, because he is already talking about "Rs 1,50,000 crore every year" from sale of shares of PSEs. Only, he needs the help of "proper marketing"; but already the marketing industry is looking at him as a super salesman who could overshoot his target this fiscal. Did they under-price the issue? The ONGC issue had a price band of Rs 680-Rs 750, and the ultimate price was to evolve through a book-building exercise. While one can say, in retrospect, that the price was fixed too low, considering the overwhelming demand, it should be appreciated that pricing is always a tricky issue. Perhaps, the Minister may be credited not only for a successful public issue but also some public service, for giving away the blue chip at bargain price. Should he continue as disinvestment minister? Since with a disinvestment realisation of Rs 15,400 crore during 2003-04, Shourie has exceeded his target by nearly Rs 1,000 crore, everybody is wondering what the right incentive should be. One school of thought says we have so many PSEs to disinvest, so give him peace to finish the job, but another line of thinking is to get him to solve the CAS problem, which brings us to yet another angle where the suggestion is to entrust the `troubleshooting department' to him, or create one such for the purpose. Investors wonder if he could make a nice supercop of the markets, because his sabre-rattling when bears did a big hug not long ago seemed to have quick effect.
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