IOC sells part GAIL pie for Rs 561 cr

Oil marketing behemoth Indian Oil Corporation (IOC) on Thursday sold half of its stake in GAIL India for Rs 561 crore through block deals. A total of 20.4 million shares were sold at Rs 275 a share.

Life Insurance Corporation (LIC) picked up 9 million shares, while Prudential Asia Fund Management bought around 2.8 million shares, according sources. LIC already has 4.3 per cent stake in the company as of December 2005.

Indian Oil would realise Rs 561 crore, net of securities transaction tax. IOC had acquired the shares of GAIL, along with oil exploration behemoth ONGC, for Rs 60 a share. Over the last eight years, the company's investment has gained 358 per cent or around 20 per cent on an annualised basis.

Currently, the government holds 57 per cent stake in the company. ONGC holds 4.83 per cent stake or 40.83 million shares in the company, which it is looking to offload the stake through a similar route. IOC, however, may continue to hold the rest of the shares (another 20.4 million) in GAIL.

The selloff by IOC is part of the bigger plan to untangle cross-holdings in oil companies. ONGC and IOC had obtained approval from their respective boards to dilute cross-holdings after the government cleared the proposal to help the oil companies raise money to tide over the tight cash position.

IOC shares ended lukewarm on Thursday, up 1.28 per cent at Rs 563.9. GAIL shares ended 2.46 per cent up at Rs 281.