* Offer revives stalled government share sale process
* Bids total 51.6 million shares vs 37 million on offer
* LIC, SBI among bigger investors - sources
(Updates bid figures from stock exchanges, adds analyst)
By Prashant Mehra and Sumeet Chatterjee
MUMBAI, Nov 23 India raised 8.1 billion rupees
($147 million) by selling shares of state-run Hindustan Copper
Ltd. on Friday, kick-starting a stalled divestment
programme that is crucial to reining in a ballooning fiscal
The success of the auction, the first share sale by New
Delhi in eight months, is expected to boost prospects for other
state asset sales, although the deal was supported by buying
from state institutions.
New Delhi aims to raise 300 billion rupees by selling shares
in state companies in the fiscal year ending in March. Excluding
the latest sale, it has managed just 1.25 billion rupees so far.
Weak market conditions, corruption scandals and wrangling
among government officials have delayed several planned
"The fact that they are pushing this forward is a positive
sign," said Sam Mahtani, a London-based fund manager at F&C
Asset Management, which owns Indian shares worth $350 million.
"Obviously they do need the funds to tackle the fiscal
deficit," he said.
India may end the year with a fiscal deficit of 5.6 percent
of gross domestic product, above an official target of 5.3
percent, a top government official said on Thursday.
That would make it tougher for New Delhi to avoid a credit
The auction of India's third-largest copper producer drew
bids for 51.6 million shares, stock exchange data showed,
representing 5.6 percent of its share capital.
New Delhi offered 37.01 million shares, or 4 percent of the
company, but had the option to sell a further 51.71 million. The
government is likely to exercise the overallotment option and
allocate all shares for which it received bids, two sources with
direct knowledge of the matter said.
The bids had a weighted average price of 156.56 rupees a
share, exchange data showed, slightly above the 155 rupees floor
The government owns 99.59 percent of Hindustan Copper, and
the limited free float had inflated the traded price of the
shares. The stock fell about 20 percent, its daily limit, on
Friday to 212.95 rupees.
Mumbai-based Angel Broking had advised investors to avoid
buying shares in the auction due to a high valuation.
At the floor price, the stock's enterprise value is
equivalent to 24.5 times the company's earnings before interest,
tax, depreciation and amortisation, compared to five to 10 times
at peers Coal India and NMDC, it said.
State-run Life Insurance Corp of India and State Bank of
India were among the bigger buyers of shares, the
sources said, an indication of muted interest from private
The government has lined up stake sales in miner NMDC Ltd
and explorer Oil India before Dec. 20, a
government official said this week.
Axis Capital, ICICI Securities, Kotak Securities, SBI
Capital and UBS were the lead managers for the
Hindustan Copper sale.
($1=55.2 Indian rupees)
(Reporting by Prashant Mehra and Sumeet Chatterjee; Editing by
Tony Munroe and Tom Pfeiffer)