March 5: Warren Buffett, the world’s second-richest man after Bill Gates and rated as one of the savviest investors in the world, is believed to have pumped $1 billion into Oil and Natural Gas Corporation’s blockbuster public issue that opened today.
If the government was looking for big-name icons to tom-tom just how iridescent its selloff programme has been, it could have found no one better than Buffett, who is the world’s most famous value investor.
Buffett’s strategy — which is to buy stocks in companies when they are low based on the conviction that they will rise over time — has left him with a personal wealth that Forbes magazine estimated at $42.9 billion.
Buffett is a major investor in top-rated companies like Coca-Cola Inc and American Express and runs Berkshire Hathaway, one of the world’s best known investor fund management companies.
The legendary investor has been keen to buy into the action in the Indian petroleum sector. Last year, he bought into Chinese petroleum companies confirming his long-term interest in energy stocks.
In Delhi, disinvestment minister Arun Shourie said he wasn’t aware if Buffett had shovelled his cash into the oil giant’s public issue — which is the largest in Indian corporate history with 14.25 crore shares on offer amounting to 10 per cent of the company’s total stock.
“I do not know (if Buffett has invested). But if an astute investor like him is putting in his money in ONGC, it is a vote for India,” said Shourie.
The ONGC issue, which opened at 10 am, was oversubscribed in the first 10 minutes. At the end of the day at 5 pm, the issue was oversubscribed 2.8 times — showing that investors were not deterred by the high price band of Rs 680-750 per share suggested by the government.
“By now, bids for $4.85 billion (over Rs 22,000 crore) have come in,” Shourie said.
“In these six weeks, we will have raised 3.5 times of what was raised in three years between 2000 and 2003 and a quarter more than has been raised in the equity market in India since 1998-99.”
The ONGC issue — billed as the largest-ever public offering by a company — is expected to bring in Rs 10,000 crore into the government treasury.
Although there was no official confirmation of Buffett’s investment in the ONGC stock, the rumour fanned interest in the issue and sparked a stampede by foreign institutional investors.
“We had an inkling in the past few days (of Buffett’s interest),” said Nimesh Kampani, chairman of J M Morgan Stanley, one of the three lead managers to the issue.
“The response from foreign investors in the 12 roadshows was hugely encouraging,” he added. “It is clever marketing,” said a leading broker and added that it would help the issue to do better in the coming days.
Merchant banking sources identified another big investor as the government of Singapore, which apparently put in $300 million.
Analysts, however, said the high price band meant that the stock would be out of reach for most retail investors. Small investors can invest for a minimum of 10 shares and a maximum amount of Rs 50,000.
Kampani said he was still keeping his fingers crossed. “Let us not get complacent,” he said.
“We still have to ensure that the demand will help the government get a better price for its shares.”
Most of the bids came between the range of Rs 680 and Rs 720. The small investors are entitled to a discount of 5 per cent over the final price fixed for the issue.