This Hindustan Copper Disinvestment by the Government~ A Farce of an Exercise !
The Government is Desperate to Save Face after announcing to appease in September the Disinvestment in 4 Listed PSUs and one unlisted PSU ~ Hindustan Copper was at Rs 269 at the time ~ Yesterday the Floor Price for Part Offer for Sale was decided at Rs 155! causing the Share Price to drop dramatically by 20% to Rs 213 from an earlier day closing of Rs 266 !
Friday, September 14th, 2012
Earlier in March 2012 too the Government had forced LIC and other PSU Banks to bid for ONGC at over Rs 300 ! to bail out that offer ~ Today ONGC is at Rs 251 !
Saturday, March 3rd, 2012
This is a Classic Illustration that our Markets remain Inefficient and Share Prices can be controlled and manipulated at will in illiquid Stocks where Floating stock is marginal and insignificant ~ by those who hold Controlling Equity ~ in this case the Government !
Valuation Has to be a Fair Guiding Criteria when Pricing any Issue ~ Any Premium or Discount can then be deliberated based on Market Sentiment and Momentum
So when the Government sets Rs 155 as the Floor Price for Hindustan Copper which is at a steep 42% discount to the Market Price before the announcement it is confessing to two real issues
- It is Desperate to kickstart the Disinvestment Exercise announced in September at any Price !
- It is sending out a strong and rather amusing message that the Value of Hindustan Copper is much much less than the Traded Share Price before the Announcement !
I honestly don’t know whether to cry or laugh here at the Government’s Folly !
Also for Years I have been staunchly against such a Mode for Disinvestment where the Government is desperate for Funds and is adopting,and at times even boasting of the Disinvestment Route, and selling Family Silver ~ but it’s only going from their One PSU Hand to their Other PSU Hand ! when they direct their controlled PSUs to participate in the Offer For Sale at particular Pricing ! ~ at the same time they keep preaching for Investor Security & Protection in IPO Pricing but when it comes to a PSU IPO they too get greedy for Premium Pricing ~ NHPC IPO at Rs 36 in August 2009 being a case in Point !
Friday, August 7th, 2009
So what is the Real Value of Hindustan Copper !? ~ Clearly not Rs 250+ ! ~ Can we be be guided by the Floor Price of Rs 155 then ! ?
Is the Issue Under Priced or Over Priced !? ~ Why is our Regulator SEBI a mute Spectator on the Pricing Controversy !?
What’s the Point of even attempting to gauge when even after this Disinvestment exercise the Government will continue to hold 95.59% of the Equity ! ~ It holds 99.59% currently and is offering 4% or 3.7 cr shares in this frivolous exercise ! ~ it has planned to offer a total of 9.59% to bring down stake to 90-% finally ~ clearly it has not been able to offer the full lot of 8.87 cr shares at the market price of Rs 250+ ! indicating that it was a contrived price on the bourses !
And what is the Government getting through this Hindustan Copper Disinvestment now ~ a measly Rs 575 +crs ! a few additional hundreds of crs more if it exercises the discretion to allot all shares applied for which now aggregate more than the Offering after some arm twisting with LIC and State Bank of India who put in large applications last minute
And Frankly I fail to see the Role of the Five Lead Managers here ! ~Axis Capital, ICICI Securities, Kotak Securities, SBI Capital and UBS ~ perhaps they guided on the Floor Price ! ~ Have they brought in Investors!? ~because all I see ,yet again,is the Government directing it’s other PSUs to apply to bail out the Issue !
Hey Mr Chidambaram Call of the Issue !