Indian Oil mega follow-on issue to hit market in January

State-owned Indian Oil Corporation’s proposed follow-on public offer (FPO) will hit the market in the second half of January next year.

The FPO, which is slated to be the largest ever equity offering in the country, is expected to raise `20,000 crore.
“We are expecting the FPO in the third or fourth week of January,” said IOC chairman BM Bansal.

The offer will comprise divestment of 10% government equity and 10% issue of fresh capital by the company.

After 10% divestment and 10% fresh share sales, government stake in Indian Oil Corp will reduce from 78.92% to 64.57%.

IOC has fast-tracked the process for its FPO and has hired six merchant banks — Citigroup, Morgan Stanley, ICICI Securities, Merrill Lynch, SBI Capital and UBS — to manage the issue.

The FPO qualifies for the Securities and Exchange Board of India’s fast-track norms that help well-established and listed companies quickly access the market.
The mega offer is part of the government’s Rs40,000 crore disinvestment programme planned for this fiscal.

So far, it has managed to raise around Rs21,000 crore by selling stakes in Satluj Jal Vidhyut Nigam, Engineers India, Coal India and Power Grid Corporation.

The government is going fast on completing share sales in Manganese Ore India, Shipping Corp of India,
Hindustan Copper, SAIL, and Oil and Natural Gas Corp, so that it can raise the Rs40,000 crore target set for the 2010-11 fiscal.

With stake sales and a windfall of Rs1.06 lakh crore from sale of 3G spectrum and broadband wireless access services, the government estimates its fiscal deficit to be within 5.5% of GDP in
current fiscal year.