ONGC price may derail govt plan for retail investors

The current market price of Oil and Natural Gas Corporation (ONGC) shares has made the centre's task of offering a sizable percentage of the scrip to retail investors a difficult proposition.

The shares of the public sector oil company, which have a face value of Rs 10, have been trading in the Rs 730-Rs 740 range for quite some time on the BSE and the NSE.

So, if the disinvestment ministry offers a discount of less than 30 per cent, it will not benefit retail buyers.

This is because, according to the current Securities and Exchange Board of India (Sebi) guidelines, a retail investor is someone whose total investment offer for an issue is not more than Rs 50,000. Even a minimum investment for a block of 100 shares, at the current market price, will far exceed this limit.

The Sebi guidelines distinguish between three types of investors "" retail investors, non-institutional buyers, comprising high networth individuals, and qualified institutional buyers, comprising mutual funds, financial institutions and banks.

Any public issue must allocate at least 25 per cent of the offering to retail investors, including the first two categories. However, government sources said for ONGC this was expected to be very high.