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Oil India gets ready for flotation

Mumbai, Dec. 17: Oil India Ltd has filed its draft red herring prospectus with the Securities and Exchange Board of India for its initial public offering.

The company will issue 2.6 crore equity shares through book-building, of which 24 lakh shares are reserved for its employees.

This comprises 11 per cent of the fully diluted post-issue paid up capital of the company.

The company is likely to enter the capital market by February next year, merchant banking sources said.

Currently, the government has a 98.17 per cent stake in the company, while the remaining stake is with employees. After the IPO, the government’s stake will come down to 78.43 per cent.

The government is divesting 10 per cent of its equity to the general public. Besides, a similar quantum is being sold to the Indian Oil Corporation, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited. The remaining stake would stay with the employees.

Of the issue to the public, 60 per cent is for qualified institutional buyers, 30 per for retail investors and 10 per cent for non-institutional bidders.

Oil India is engaged in the exploration, development, production and transportation of crude oil and natural gas.

Globally, it is scouting for crude oil and natural gas in Iran, Libya, Gabon and Nigeria and has won exploration blocks in Yemen as part of a consortium.

A bulk of its oil and gas reserves are in Assam and Arunachal Pradesh. The company also has reserves in the Bikaner-Nagaur basin in Rajasthan.

The issue proceeds will be used to fund its plans in 2008-09 and the year after.

In addition to exploration and development, the company plans to diversify into the downstream sector.

The equity shares offered are proposed to be listed on the Bombay Stock Exchange and the National Stock Exchange.

The book running lead managers to the issue are JM Financial Consultants Private Limited, Morgan Stanley India Company, Citigroup Global Markets and HSBC Securities and Capital markets.

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