NMDC FPO...yet another flop show

After two bad attempts at French auction, the Government decided to dump the method of discovering price for the follow-on public offering (FPO) of state-run miner NMDC. It decided to employ the old practice of book-building for the NMDC issue. Still, that was not enough as the FPO got off to a dismal start on day one. The issue received bids for only 17% of its size on day one. Things improved slightly on day two, when the overall subscription rose to 79%. The Government's misery was somewhat curbed by public sector insurance giant LIC, which is believed to have picked up a big chunk of the FPO. It got fully subscribed only in the mid-afternoon on Friday. Valuation was said to be the biggest concern that kept potential investors at bay. This was the third straight Government that received poor response from the market. Going forward, the Government will have to take a long and hard look while pricing the future FPOs that it may have lined up as part of its disinvestment programme.