Investors offered a lukewarm response to the follow-on offering of Power Finance Corporation (PFC) on the first day of subscription on Tuesday. The issue, which kicks off the divestment programme for the government this fiscal year, is the first large offering to hit the market after Power Grid's issue in November 2010.
The price band has been fixed between Rs 193 and Rs 203. Around 10% of the book was covered at the top end of the price band, with bids coming in from domestic institutions such as SBI , ICICI Bank and a public sector bank. A couple of foreign funds are said to have invested via participatory notes. The book is open for qualified institutional buyers from May 10-12 and will open for retail on May 13.
Given that institutional investors are expected to cough up 100% of the margin money upfront, bankers expect interest to pick up on the last day. The PFC stock has corrected by around 35% in the past six months, mainly due to rising interest cost and issues such as delay in commissioning and environmental clearances of projects it has invested in. "Given this sharp drop in the price and just 4% gap between the cur-rent market price and the upper band of offer price, there is not much on the table for the investors," says an analyst with a domestic brokerage, who prefers not to be named.
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