In a development that may lead to the opening of a dedicated window for retail investors, the department of disinvestment is considering a separate offer for sale meant for them.
The proposal is significant in the light of a view expressed in the context of the recent ONGC share auction that the process was not conducive to retail participation.
A senior department official told Business Standard, “A suggestion has come that once you do an auction, you give a discount and offer it to retail investors immediately or after some time”.
He, however, said it would have its own implications, as those willing to bid aggressively in an auction might be affected by the knowledge that the same quantity would be available at a discounted price.
“It’s not all that simple. These are contradictory demands on the system. One is you want to maximise the price. The other is you want to sell cheaply to another set of investors. We really hope a better mechanism is thought of so that both ends are met,” said the official.
He indicated that if a separate window for retail investors was not possible, then whenever it was felt retail participation was a must, the government would go for a follow-on public offer rather than an auction.
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Data on the ONGC auction showed retail investors did participate; a majority of them, probably, just to test it.
“There are a large number of bids only for one to five shares. Big purchases are only five or six and the rest are for less than 1,000 shares,” said the official. The Life Insurance Corporation cornered the largest slice.