Disinvestment: SAIL OFS subscribed 4.14 times of base size; govt to exercise greenshoe option

• In the wake of over-subscription, the government has decided to exercise the greenshoe option which will allow it to sell an additional 5 percent

• For retail investors, bidding will open on January 15

New Delhi: On day 1, state-run Steel Authority of India Ltd's (SAIL) offer for sale (OFS) was subscribed 4.14 times of base size at a clearing price above the floor price by non-retail investors, said Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey on Thursday. In the wake of over-subscription, the government has decided to exercise the greenshoe option which will allow it to sell an additional 5 percent shareholding in the steel major.

"Offer for Sale of Govt shares in SAIL got great response on day one. Issue subscribed 4.14 times of base size at a clearing price above the floor price by non- retail investors. Govt has decided to exercise the green shoe option. Retail investors get chance to bid tomorrow," said Pandey on Twitter. The OFS opened on Thursday for non-retail investors. For retail investors, bidding will open on January 15.

Disinvestment: Govt likely to raise over Rs 2,600 cr from SAIL OFS

At the floor price and for the base offer, the government is likely to raise Rs 1,322 crore by selling 5 percent stake in SAIL. Upon exercising the greenshoe option, the government will raise over Rs 2,600 crore. The total OFS size has been calculated at 206,526,264 equity shares of the face value of Rs 10 each (Base Offer Size), with an option to additionally sell up to 206,526,264 equity shares of the firm (over-subscription option).

ALSO READ: SAIL Disinvestment: Govt to sell up to 10% stake in SAIL, OFS to open on Jan 14

The greenshoe option is a provision that allows the underwriter of a public offer to sell additional shares to the public in case of over subscription.

The backdrop

On January 13, the government announced Indian Railway Finance Corporation's initial public offering (IPO) of about Rs 4,600 crore. The government is chasing a disinvestment target of Rs 2.1 lakh crore. However, DIPAM has so far managed to raise only Rs 30,000 crore. The Covid-19 pandemic has slowed the progress of all of the government's big disinvestment plans for the year.

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