29th Feb 2012,Wednesday
State-run Oil and Natural Gas Corp will launch on Thursday a share sale through an auction that aims to raise at least $2.5 billion. The offering will close on the same day, the company said.
The government will sell 5 per cent of its holding, or about 428 million shares, in the offering and the floor price for the issue has been set at 290 rupees a share,ONGC said in a notice to stock exchanges late on Tuesday."Given the initial overwhelming responses from large institutional investors and some sovereign funds, the cut-off price is expected to be higher than the floor price," the source added.
The issue may not attract retail investors, who would be looking for a discount. "Retail participation is usually low in follow-on public issues, unless it is priced at a discount to market price. ONGC issue will see good institutional investor participation. There's good appetite for public issues of government companies," said Rashesh Shah, chairman and CEO, Edelweiss Group.
The government in the budget for 2011-12 had envisaged to raise Rs 40,000 crore through PSU disinvestment, but in about 11 months it could mop up only Rs 1,145 crore from stake sale in the Power Finance Corporation (PFC).
The government had earlier postponed stake sale in several state-owned companies on account of poor market conditions.
Government on Tuesday approved the sale through a share auction, Oil Minister S. Jaipal Reddy said, reviving the government's faltering divestment programme.
Shares of ONGC surged over 3% in early trade after thenews of share sale.
State-run Oil and Natural Gas Corp will launch on Thursday a share sale through an auction that aims to raise at least $2.5 billion. The offering will close on the same day, the company said.
The government will sell 5 per cent of its holding, or about 428 million shares, in the offering and the floor price for the issue has been set at 290 rupees a share,ONGC said in a notice to stock exchanges late on Tuesday."Given the initial overwhelming responses from large institutional investors and some sovereign funds, the cut-off price is expected to be higher than the floor price," the source added.
The issue may not attract retail investors, who would be looking for a discount. "Retail participation is usually low in follow-on public issues, unless it is priced at a discount to market price. ONGC issue will see good institutional investor participation. There's good appetite for public issues of government companies," said Rashesh Shah, chairman and CEO, Edelweiss Group.
The government in the budget for 2011-12 had envisaged to raise Rs 40,000 crore through PSU disinvestment, but in about 11 months it could mop up only Rs 1,145 crore from stake sale in the Power Finance Corporation (PFC).
The government had earlier postponed stake sale in several state-owned companies on account of poor market conditions.
Government on Tuesday approved the sale through a share auction, Oil Minister S. Jaipal Reddy said, reviving the government's faltering divestment programme.
Shares of ONGC surged over 3% in early trade after thenews of share sale.
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