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Praveen Gurwani
The Cairn India IPO (initial public offer), the country’s second-largest maiden public issue at Rs 6,200 crore, was oversubscribed 0.31 times on the first day of the issue, with qualified institutional buyers putting in bids for 2.2 times the shares allotted to them.
The stock opening on a day that saw the stock market tank nearly 400 points was expected to be a slow mover. Also, the uncertainty over the transportation issues was also expected to affect the float.
Cairn had warned investors that its dispute with ONGC, its partner in the Rajasthan blocks, over funding of the pipeline might delay production, scheduled to begin from 2009.
However, towards the end of the day, its IPO saw institutional bids pouring in, market sources said. It received around 8,000 bids, amounting to 341.5 million shares, against the 328.8 million offered. Most bids were at the upper end of the Rs 160-190 band. The sources said Nalco was one of the biggest institutional bidders.
Analysts said with the issue already oversubscribed, retail investors would begin putting in their bids from tomorrow, and the issue might be oversubscribed up to two to three times by the end of the week.
Lalit Thakker, head of research at Angel Broking, said, “Most retail investors tend to wait till the issue is fully subscribed and then start bidding. From tomorrow we can expect them to start putting in their bids. Most of them will be looking forward to short-term gains at listing and may exit at listing.”
Petroleum Nasional Bhd, Malaysia’s state-owned oil company, bought 209.67 million of Cairn India shares in a pre-share sale placement at Rs 176.48 a share. If investors paid lower than that, Petronas and others would lower the prices they paid accordingly, the company said.
Cairn Energy expected oil output from the Rajasthan field to reach 1,50,000 barrels a day by 2009, a peak level which might be sustained for 7-10 years, Michael Watts, Cairn’s director for exploration, said on November 8. The company plans to spend $1.5 billion for developing 1 billion barrels of reserves in four fields in Rajasthan.