Most IBP employees had made a hefty killing through sale of their shares in IBP over the last few days at Rs 650-800, but Indian Oil Corporation's price of Rs 1,551 left all of them red-faced at the missed opportunity.
Several senior managers admitted that they had sold shares late on Monday at around Rs 700, while a few had sold shares at close to Rs 800 this morning before the results of the bidding were announced.
"The price of Rs 1551 was beyond all expectations and the few lucky ones who held on to shares will now reap the benefit", admitted managers.
The employees of IBP had been offered 200 shares each at Rs 110 in 1993 through a rights issue of equity to employees. They had then been offered a right issue in 1997 in the ratio of 1 for 2. In other words, employees who picked up 200 shares for Rs 22,000 in 1993 saw their portfolio grow to 300 shares by 1997, at an average price of Rs 73.33p.
With the same shares going at Rs 700 on Monday afternoon, few could resist the temptation of selling out. The sale decision also had some hard logic behind it. With 40 per cent of IBP's equity held publicly, and the bidder expected to make an open offer for 20 per cent of the equity, or half of the floating stock, most expected half their stocks to be picked up by the successful bidder.
As the bid price was expected to be around Rs 1000, this would have worked out at Rs 500 a share for the entire holding if the balance was not picked up. The Rs 700 price on Monday evening thus appeared attractive. The Rs 1551 bid upset all private financial calculations.
