The government on Tuesday was assured of at least Rs 3,700 crore from NMDC's share sale after institutional investors overwhelming subscribed to the OFS on day 1. The government is selling over 21.95 crore shares or 7.49 per cent stake in state-owned miner NMDC at a floor price of Rs 165 a piece.

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This is the first CPSE Offer for Sale (OFS) in the current fiscal.

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The 7.49 per cent stake includes 4 per cent base issue size with an option to retain an additional subscription of 3.49 per cent.

In a regulatory filing, NMDC said it has decided to exercise the green-shoe option and retain the over-subscription.

The two-day OFS will open for subscription by retail investors on Wednesday. Over 2.19 crore shares would be offered to retail investors at a floor price of Rs 165 a piece.

On Tuesday, as against over 10.55 crore shares on offer for institutional investors, they put in bids for over 22.55 crore shares or 2.14 times.

At the indicative price of Rs 166.46 a share, the bids put in by institutional investors is valued at over Rs 3,753 crore, as per NSE data.

"Offer for Sale of Govt shares in NMDC got great response on day one. Issue subscribed 2.13 times of base size at a clearing price above the floor price by non-retail investors. Govt has decided to exercise the green shoe option," Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey tweeted.

At the floor price of Rs 165 a share, the NMDC OFS is expected to fetch around Rs 3,700 crore to the exchequer.

Shares of NMDC closed at Rs 169.65, down 3.22 per cent over previous close on the BSE.

The government currently holds 68.29 per cent stake in NMDC.

The disinvestment target for current fiscal has been set at Rs 1.75 lakh crore. So far, the mop up stands at Rs 3,994 crore through sale of SUUTI stake in Axis Bank.