ONGC stake sale on Mar 1; floor price fixed at Rs290 a share

Running against time to meet the Rs40,000-crore disinvestment target, the Centre today decided to offload five per cent stake in ONGC on March 1 through auction route at a floor price of Rs290 a share that could fetch the Exchequer about Rs12,000-13,000 crore.

"The ONGC stake sale through the auction route (will take place) in couple of days," Oil Minister Jaipal Reddy told reporters after a meeting of the Empowered Group of Ministers (EGoM) which was chaired by Finance Minister Pranab Mukherjee.

"The floor price for the sale has been fixed at Rs290 per share," ONGC said in a late night filing to NSE. The floor price, the minimum price for selling a share, is over 2% higher than ONGC's closing price of Rs283.05 on NSE and Rs283.55 on BSE.

The auction will be between 9.15 am and 3.30 pm.

The government owns 74.14% stake in ONGC and proposes to offload 427.77 million shares or 5% equity. The sale may fetch the hard-pressed government about Rs12,000-13,000 crore this fiscal.

The shares would be sold to institutional as well as retail investors on the "price priority" basis.

Six brokers including Citigroup Global Markets India, Morgan Stanley India Company and DSP Merrill Lynch will manage the share sale.

The auction route or 'offer for sale of shares by promoters' involves very little paperwork and the whole process can be done within one trading day.

Capital market Regulator Securities and Exchange Board of India (SEBI) had issued norms allowing promoters to sell stake by way of auction, through a separate window on BSE and the NSE, which has to be completed within a day.

The auction route or 'offer for sale of shares by promoters' involves very little paperwork and the whole process can be done in just a trading day.

This is the second disinvestment this fiscal, after mopping up Rs1,145 crore through stake sale in Power Finance Corp. The government envisages to raise Rs40,000 crore through disinvestments this fiscal.