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The government will divest 10 per cent stake in Indian Oil Corporation (IOC) on Monday. This could raise around Rs 9,500 crore, making it the biggest stake sale in the current financial year.
In a regulatory filing with the exchanges, the government, which holds 68.6 per cent interest in IOC, said it would sell 242.8 million equity shares through an offer for sale (OFS), the floor price for which would be announced on Saturday evening. At least a fifth of the offer size has been reserved for retail investors, who will also get a five per cent discount.
The scrip closed 0.7 per cent down at Rs 394.45 a share on the BSE exchange.
This will be the Centre's fourth divestment this financial year. The earlier three stake sales, of Rural Electrification Corporation, Power Finance Corporation and Dredging Corporation of India (the third one was done on Friday) had raised a combined Rs 3,000 crore.
“It is a very good time to divest (stake in) IOC. We spoke to the merchant bankers recently and got excellent feedback,” Disinvestment Secretary Aradhana Johri told reporters on Friday.
IOC is the nation’s biggest oil refining and marketing company, with 54.2 million tonnes (mt) of refining capacity, nearly a fourth of India’s total of 215.1 mt. Besides, it owns and operates 24,405 fuel pumps, a little less than half of India’s 53,419 filling stations.
The OFS will open at 9:15 am on Monday and close the same day at 3:30 pm. “No single bidder other than mutual funds and insurance companies shall be allocated more than 25 per cent of the shares being offered,” the regulatory filing said.
The five bankers handling the sale are CitiGroup, Deutsche Equities, Nomura, JM Financial and Kotak Securities.
Additionally on Friday, the government sold five per cent in Dredging Corpor-ation of India. The issue was subscribed 2.65 times, with the 10 per cent quota for retail investors subscribed 11-fold times. In all, bids worth Rs 142 crore were received, Johri said. The stake sale would fetch Rs 53.5 crore to the exchequer
For 2015-16, the government’s budgeted disinvestment target is Rs 69,500 crore, of which Rs 41,000 crore is expected from stake sales in state-owned companies and Rs 28,500 crore from sale of loss-making public sector units or other unviable assets like warehouses, factories, hotels and the like.
The government already has cabinet approval for stake sales worth Rs 50,000 crore in 20 companies, though all these might not be sold this year. It is in the process of selecting merchant bankers for many — MMTC, NMDC, Container Corporation, Oil India, National Aluminium, Bharat Electronics, India Tourism, Hindustan Copper and NTPC. Additionally, it might sell 10 per cent in Coal India.
