The Telegraph
Since 1st March, 1999
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Stock-taking before mega opening
- Arun Shourie meets merchant bankers in Mumbai to finetune strategies for the ONGC issue

Mumbai, March 1: Arun Shourie is leaving no stone unturned to ensure the success of the ONGC mega public offering. The disinvestment minister was here today to see for himself how the merchant bankers have prepared themselves to sell the mother of all issues. The issue, which opens on Friday (March 5), hopes to rake in close to Rs 10,000 crore.

During his meeting with the merchant bankers, Shourie not only finetuned the selling strategies but also discussed the crucial issue of pricing of the offer. The government, in all probability, will be announcing the ONGC issue price on Thursday (March 4).

The initial feedback from foreign investors on the Oil and Natural Gas Corporation offer is encouraging, merchant bankers told Shourie.

“Overseas investors have shown a strong interest in the divestment of the government’s 10 per cent stake in ONGC through this public offer,” Shourie said.

“The pre-bid conferences have been encouraging and I am optimistic about the response to the offer,” Shourie told newspersons after an interactive session with the merchant bankers to the issue.

Merchant bankers will conduct issue conferences in 23 cities, including some abroad. ONGC chairman Subir Raha is likely to attend the roadshow in Singapore, the minister said.

The recent public issues have seen a fair bit of improvisation by regulators to help the divestment process. When asked if regulatory issues to facilitate the bidding process were discussed today, Shourie said, “Such concerns are over.”

Merchant bankers point to the recent trends in the Gail, IPCL and, to some extent, IBP to prove that the appetite for Indian stocks is still quite large.

The portion allotted to qualified institutional buyers in these issues have got encouraging bids. ONGC’s floating stock, which is currently in the region of 4 per cent, will increase four times after the issue.

ONGC, which enjoys the largest market capitalisation in the market now, will find foreign indices like the MSCI welcoming it on board based on the increased flotation.

The government has also ensured that the price discovery for the ONGC share is not disturbed by restraining Gail and Indian Oil from selling their stake in the company for the next six months.

As preparations for the issue enter the last lap, the sharp surge in public sector stocks today will bolster the issue’s prospects.

Merchant bankers say there are several leading foreign funds that invest only in the petroleum sector. They are keen to invest in this issue as ONGC is seen as a company that provides energy security for the country. The company’s recent success in diversifying its oil assets in Sudan and Sakhalin has added to its image.

Several bigwigs from the financial sector like HDFC chairman Deepak Parekh also met Shourie today.

DSP Merrill Lynch, Kotak Mahindra Capital Company and J M Morgan Stanley are lead managers to the book-built issue.

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