New Delhi, Feb. 4: State-owned ONGC and Oil India have informed the government that they will buy a 10 per cent stake in Indian Oil Corporation (IOC) at a six-month average trading price of the PSU refiner’s shares and not the current market price.
The IOC scrip has surged to Rs 242 per share from Rs 212 on January 16, when the empowered group of ministers decided on the upstream oil producers buying the government stake in IOC.
The ministerial panel had decided that the two companies would buy a 10 per cent stake in IOC at a discount of 1 per cent to the previous closing price. They will also have the option to sell the shares in the market without any restriction.
The boards of ONGC and Oil India maintain that it will be better to do an off-market trade based on the six-month average share price of IOC in the backdrop of a significant rise in the scrip.
The Centre had expected to raise between Rs 4,800-5,000 crore by divesting a 10 per cent stake in IOC. The spike in IOC’s share price after the government decided to sell stake to ONGC and IOC has raised the valuation of the Centre’s holding.
The follow-on public offer (FPO) of Engineers India Ltd (EIL) will hit the market on February 6 at a price band of Rs 145-150 per share.
The government will sell a 10 per cent stake in EIL through the FPO route. The divestment in expected to fetch Rs 500 crore.
“The FPO will open on February 6. It will remain open for three days,” petroleum secretary Vivek Rae told reporters here.
The empowered group of ministers, headed by finance minister P. Chidambaram, today decided on the price band and the timing of the issue.
The government plans to sell 3.36 crore EIL shares, with up to 5 per cent of the offer reserved for employees. It holds 80.4 per cent in the miniratna public sector undertaking. In 2010, the Centre had divested 10 per cent in the company through a follow-on offer.
The government plans to raise Rs 40,000 crore through divestments in this financial year. So far, it has raised just Rs 3,000 crore.