* Gets bids for 686.9 mln shares vs 396.47 mln on offer
* Foreign investors bid for half the offer in iron ore miner
* Govt aims to sell a further $4.25 bln in shares by
(Recasts lead, adds details, fund manager comments)
By Prashant Mehra
MUMBAI, Dec 12 India raised $1.1 billion selling
a stake in miner NMDC Ltd in a fillip for its efforts
to rein in a widening fiscal deficit through sales of state
The government aims to secure $5.5 billion in the current
fiscal year ending next March by divesting stakes in state
companies, a target many economists consider to be optimistic.
Before Wednesday, it had raised just $148 million in a
process hit by volatile markets and wrangling among government
The share sale was the largest by the government since a
$2.5 billion auction of stock in state explorer Oil and Natural
Gas Corp at the end of the previous financial year
that required large bids from state investors.
Many economists expect India's fiscal deficit to hit around
5.6 percent to 5.8 percent of gross domestic product this fiscal
year, above an official target of 5.3 percent.
In the NMDC sale, the government offered 396.47 million
shares, or 10 percent of its stock, at a floor price of 147
rupees, an 8 percent discount to Tuesday's close.
By the close, the offer had attracted bids for 686.92
million shares at an indicative weighted average price of 149.15
rupees, exchange data showed.
"The pricing was the key," said a fund manager at a large
domestic mutual fund who bid for NMDC shares and declined to be
named. "This should bolster the government's confidence that
there is interest in public sector stocks at the right price."
The government, which is expected to step up its divestment
programme in the months ahead, has approved share sales in top
power utility NTPC Ltd, explorer Oil India Ltd
, state trading firm MMTC Ltd and power
equipment maker Bharat Heavy Electrical Ltd.
"The message is loud and clear--a quality asset at the
right price will find a buyer," said Jagannadham Thunuguntla,
equity head at SMC Global Securities.
"On the face of it, it now looks that the government should
be able to meet its disinvestment target," he said, adding that
upcoming share sales are in larger companies with solid
Foreign institutional investors bid for about half of the
total shares on offer, a finance ministry official said, with
domestic funds making up the balance of the oversubscription.
State investors sought nearly 40 percent of the offer but
are expected to get an allocation of about as most of their bids
were at the floor price, said the official, who asked not to be
In two other recent government deals, state financial
institutions ended up buying the bulk of the offer due to
limited private sector interest.
Analysts expected the sale to generate robust demand, given
what they said were attractive valuations, strong growth
prospects for the company and a limited supply of traded shares.
NMDC, India's top ore miner, accounts for about 15 percent
of iron ore mined in the country, with annual production
capacity of 30 million tonnes.
Shares in the company closed 3.3 percent lower at 154.30
rupees, but still at a premium to the indicative offer price.
The stock has declined 4 percent in 2012, compared with a 25
percent gain in the main stock index.
Citigroup, Goldman Sachs, Bank of America
Merrill Lynch and Indian investment banks ICICI
Securities and Axis Capital were the bankers for the NMDC share
(Additional reporting by Sumeet Chatterjee and Abhishek Vishnoi
in MUMBAI and Arup Roychoudhury in NEW DELHI; Editing by Tony
Munroe and David Cowell)