Retail investors may get IPCL issue cheap

Retail investors may be able to get shares of Indian Petrochemicals Corporation Ltd (IPCL) at a discount to the price offered to qualified institutional buyers and non-institutional bidders. The price band for both segments is expected to be announced a day before the bids open.

Union disinvestment minister Arun Shourie kicked off the road shows for the divestment of the government's 24 stake in IPCL yesterday.

After the offering, the government will continue to own 5 per cent of the equity capital of IPCL, which "save for a share" will be transferred to the employees of IPCL. The government will continue to own at least one share in IPCL.

Reliance Petro Investments, a group company of the Reliance group, at presents owns 46 per cent of IPCL with the government owning around 34 per cent.

After the offer, the Reliance group's stake is expected to rise to 51 per cent if they exercise their option to acquire 5 per cent of the paid-up capital of the company.

Incidentally, the Reliance group can exercise its option at a price which will be the higher of the offer price and an independent valuation carried out by A F Ferguson.

The offer for sale is being conducted through book building. The offer is for 5,94,38,774 equity shares of Rs 10 each, which can be scaled up to 7,18,50,056 shares in case the Reliance group does not exercise its option.

Qualified institutional buyers have been allocated a maximum of 50 per cent of the offer, while retail investors will be allotted not less than 25 per cent of the total offer.

On Tuesday, the shares of IPCL closed down 2.17 per cent at Rs 180.35. The bids open on February 20 and close on February 27, 2004.