LIC insurance behemoth bought 46%shares of RCF
LIC insurance behemoth bought 46% shares of RCF : Life Insurance Corporation of India (LIC) once again played the role of a white knight to rescue the share auction of Rashtriya Chemicals and Fertilizers (RCF) by the government.
The insurance behemoth bought 46%, or 31.63 million of the 69 million shares on offer of RCF during its offer for sale (OFS) last week.
The insurance behemoth bought 46%, or 31.63 million of the 69 million shares on offer of RCF during its offer for sale (OFS) last week.
This is not the first time LIC has bailed out a government disinvestment it had bought more than half of the bids in the ONGC and Hindustan Copper offering as well.
"We have not bailed out anyone. We have examined this (RCF) issue by its own strength and then taken a decision to participate. We will examine the future issues in a similar manner and then take a call,? D K Mehrotra, chairman of LIC told Business Standard today.
However, an investment banker familiar with the development said LIC was 'asked to keep the powder dry' for the RCF offering. ?As the share-sale was not even half covered an hour before the close of bids. LIC had to put in a large-ticket application,? he said requesting anonymity.
Post the OFS, LIC now holds 6.69% stake in RCF, compared to 0.96% earlier.
Shares of RCF today closed at Rs 43.1, about 4% below their OFS price of about Rs 45 per share.
Investments made by LIC are typically for the long term but the mark-to-market losses on LIC's investments in RCF share auction stand at Rs 6.2 crore.
The government had raised about Rs 310 crore by divesting its 12.5% holdings in RCF through the OFS route on March 8.The 69 million share auction was subscribed 1.3 times and bulk of the bids had come at a price of Rs 45.02 per share as against the minimum offer price of Rs 45 per share.
Last year, the state-owned insurance major had bought about 377 million shares (88%) of the 427 million shares that were on offer during the ONGC share-auction, which was part of last year's disinvestment programme.
Earlier this year too during the Hindustan Copper OFS, LIC had to pick up 22.5 million shares, more than half the total 51.6 million shares auctioned.