The level of demand indicates healthy investor appetite despite Asia's third-largest economy growing at its slowest pace in a decade and political uncertainty in view of a general election to be called by May.
The government will raise USD 270 million from selling 4 percent of the company. Power Grid, India's central power transmission utility, is issuing another 601.9 million new shares to raise funds for capital expenditure.
India aims to control its budget deficit for the fiscal year ending March, in part by raising USD 6.4 billion through the sale of stakes in state companies. But it has raised only USD 233 million since April, because disagreements among ministries and a depreciation in the rupee have complicated the timing of issues.
If the deficit is wider than the targeted 4.8 percent of gross domestic product, credit-rating agencies could downgrade the government's debt to "junk" status, significantly increasing its cost of raising funds.
The government next hopes to sell 5 percent of Coal India Ltd and 10 percent of Indian Oil Corp Ltd , which could earn it up to USD 2.3 billion, but both offerings are likely to be delayed.
"Government divestment is only happening in bits and pieces. The target is not impossible, but the Coal India (offer) is crucial toward that effort," said SMC Global Securities chief strategist Jagannadham Thunuguntla.
Neither offer is likely to begin as planned by mid December because of labour opposition at the coal miner and poor investor sentiment in the subsidy-ridden oil sector, government officials have said.
TOP END
Most bids for Power Grid shares were at the top end of an indicative price range between 85 and 90 rupees, data from the stock exchanges showed, making the final price likely to be nearer 90 rupees.
"The government got the pricing bang-on. There will always be takers for good companies which are reasonably priced," said Thunuguntla.
Institutional investors, for whom the offer closed on Thursday, bid for 9 times the number of shares available to them, with bids from foreign investors reaching USD 2.7 billion, exchange data showed.
Retail investors and employees, for whom the offer closed on Friday, bid for 2 times and 1.3 times the shares available to them respectively. These bidders will receive a 4.5 rupee-per-share discount on the allotment price.
Most analysts recommended buying the shares because Power Grid has a track record of stable returns and a strong investment plans.
The government's ownership of Power Grid will fall to 57.9 percent from 69.4 percent after selling a portion of its stake and because the company's new share issue will dilute its holding.
Shares of Power Grid closed 2.8 percent higher at Rs 98.95, compared with a 0.2 percent rise in the benchmark index .
The Power Grid share sale is India's biggest since February, when state-run power utility NTPC Ltd raised USD 2.2 billion. Indian companies have raised USD 8.3 billion by selling shares so far in 2013, against USD 14.9 billion in all of 2012, Thomson Reuters data showed.
Power Grid Corp stock price
On December 06, 2013, Power Grid Corporation of India closed at Rs 98.90, up Rs 2.75, or 2.86 percent. The 52-week high of the share was Rs 120.00 and the 52-week low was Rs 86.70.
The company's trailing 12-month (TTM) EPS was at Rs 9.76 per share as per the quarter ended September 2013. The stock's price-to-earnings (P/E) ratio was 10.13. The latest book value of the company is Rs 56.68 per share. At current value, the price-to-book value of the company is 1.74.
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