LIC may be underwriter for NMDC issue

Submitted by Sumeet Verma on Fri, 03/12/2010 - 20:44
LIC may be underwriter for NMDC issue

The Life Insurance Corporation (LIC) has emerged as the largest investor in the follow-on public offering by the NMDC with one day to go.

LIC might be underwriting the issue if the there is no significant investment by the foreign institutional investors like in the case of Rural Electrification Corp FPO. As of Thursday the issue of NDMC stands 80% subscribed while most of the bulk orders have come from LIC on floor price.

The issue has recorded very little demand from FIIs, high net worth individuals and retail investors at the same time as the Mutual Funds did not bid at all. FIIs and high net worth individuals have bid for around 3 lakh shares each. Retail investors have bid for over 33 lakh shares.

The issue involves 33.2 crore shares and the floor price is at Rs 300. The domestic financial institutions have bid for 25.40 crore shares, against the available 16.52 crore shares reserved QIBs, according to the data on NSE website.

Analysts believe that the weak response is due to the high values of the issue. On lower end of the price band the shares were quoting at 40 times estimated earnings for the financial year 2011.

The shares of the company fell 5% to close at Rs 360 on Thursday. The shares have recorded drop of 26% over the month.


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