The central government is planning to sell up to 1.5% of its stake in Oil and Natural Gas Corporation (ONGC) this week to raise around ₹3,000 crore. The offer for sale (OFS) will be open on both domestic stock exchanges – BSE and NSE – during March 30 and 31, a stock exchange filing by the company stated. The government currently owns 60.41% stake in ONGC, which is the largest oil and gas producer in the country.
The floor price of the offer has been pegged at ₹159 per share. This is at a 7% discount to the ₹171.05 closing price of ONGC stock on NSE yesterday.
The government is planning to sell up to 94,352,094 equity shares of ONGC, representing 0.75% of the total paid up equity share capital of the company on March 30. This portion of the offer will be open for non-retail investors only, who can indicate their willingness to carry forward their un-allotted bids to the next day of the offer for allocation to them in the unsubscribed portion of the retail category. They can also revise their bids within the OFS guidelines tomorrow.
The allocation of shares will be done at or above the floor price on a price priority basis at multiple clearing prices, in accordance with SEBI’s OFS guidelines, ONGC said. Indicative price for the non-retail investors will be displayed separately.
A minimum of 25% of the offer shares has been reserved for mutual funds and insurance companies. In the event of under-subscription by these two categories, the unsubscribed portion will be available to other bidders in the non-retail category. In case of oversubscription, the government will exercise the oversubscription option.
Under the oversubscription option, another tranche of 94,352,094 equity shares will be offered on March 31 for retail as well as non-retail investors who choose to carry forward their un-allotted bids. The government has reserved 10% of offer shares for the retail investors, defined in the offer document as individual investors who can place bids for not more than ₹2 lakh.
Both tranches will collectively represent 1.5% of the total issued and paid up equity share capital of ONGC. The government will inform the exchanges about its intention to exercise the oversubscription option after the trading hours on Wednesday.
ONGC employees may bid up to ₹5 lakh in the offer for sale. Up to 0.075% of the equity shares over and above the offer share will be offered to the eligible employees at the cut-off price.
ICICI Securities, Citigroup Global Market India, Kotak Mahindra Capital Company, HSBC Securities and Capital Markets (India) and UBS Securities India have been appointed as the seller’s brokers for the offer. HSBC Securities and Capital Markets (India) will act as the settlement broker on behalf of the brokers.