The OFS from REC received excellent response and was oversubscribed over 9 times in retail and 4.66 times in non-retail segment. What is even more heartening that against a floor price of Rs 315, the retail cut-off price was Rs 333.30 and Rs327.25. The overall response would result in a grinning Finance Minister on two counts. Firstly the divestment programme has never kicked off so early in the new financial year and secondly the floor price fixed has resulted in a response from retail which could be termed as unprecedented.

The floor price announced was Rs 315 against the closing price of Rs321.65. The price of REC on Monday was Rs 335.60 which means the share lost Rs 13.95 or 4.16% after the OFS was announced. Once the OFS concluded and the response was there for all to see the share had recovered by Rs 8.40 or 2.61% to close at Rs 330.05. What drove the response or what was responsible for this response? Basically a couple of factors with investors making huge money in Coal India being the main reason. Secondly there were some transactions where people lent their Pan card to HNI’s who then applied in the OFS. The going rate was Rs 3,500 which translated into a rough cost of Rs 6 per share. This meant that the person buying the pan card had to be a successful applicant and this kept on pushing the cut off rate in both the retail and the non-retail segments.

From the table one can see the response and give solace to the government for future issues. The issue garnered response of over Rs 2,800 crs in the retail segment net of discount and the overall receipts by the government were Rs 1,550 crs. I believe the next issue which is likely to be PFC may happen as early as next week.