Ahead of the Oil and Natural Gas Corp (ONGC)'s 5% stake sale which will take place today, its shares rose a percent indicating positive sentiments amongst investors.
Ahead of the Oil and Natural Gas Corp’s ( ONGC’s) 5% stake sale which will take place today, its shares rose a percent indicating positive sentiments amongst investors.
The floor price for the stake sale has been set at Rs 290/share and ONGC will sell 427,774,504 shares via auction route. Bankers for the issue are JM Financial, Citigroup, DSP ML, HSBC Sec, MS & Nomura. The government will raise around Rs 12,405.46 crore through this share sale.
In the auction method, which was permitted by SEBI last month, founders of companies can sell part of their share holding via stock exchanges instead of conducting a full public offering, saving on paperwork and time.
It may also be recalled that the government in the budget for 2011-12 had envisaged to raise Rs 40,000 crore through public sector undertaking (PSU) disinvestment, but in about 11 months it could mop up only Rs 1,145 crore from stake sale in the Power Finance Corporation .
The government has several times in the past six months deferred ONGC’s stale sale owing to poor market conditions.
But now, the ONGC stake sale has become increasingly important to help control the budget deficit, which is widely expected to overshoot the targeted 4.6% of gross domestic product this fiscal year through March by as much as one percentage point.
The government aims to narrow the deficit to 3.5% by March 2014, but heavy subsidies to artificially lower food, fertilizer and fuel prices and shield the poor from inflation have cast doubts over the government's ability to stick to its fiscal consolidation plan.
Did You Read: NSE to conduct mock bidding session for ONGC share sale
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