Rs 680-750 price band for ONGC

The government set a price band of Rs 680-750 per share for the Oil and Natural Gas Corporation's (ONGC) public issue, which will be open for subscription from March 5 to March 13.

The sale of the government's 142.6 million shares in ONGC is expected to mop up at least Rs 9,700 crore, making it the biggest public offering in the domestic market.

The ONGC scrip closed at Rs 751.55 yesterday. The floor price of Rs 680 per share is at a 9.52 per cent discount to the closing price. Retail investors will get the shares at a 5 per cent discount to the price determined by the book-building process.

The government has also reserved 10 per cent of the public offer each for employees, whole-time directors and shareholders of ONGC and its subsidiary, Mangalore Refineries and Petrochemicals.

"The government has also decided that individual applicants in the reserved category of employees and shareholders applying for shares of up to Rs 50,000 will be offered a 5 per cent discount on the discovered price," an official release said.

The ONGC scrip hit a high of Rs 995 on the Bombay Stock Exchange in January before falling in line with the broader market.

"The price band is aggressive but we expect the issue to be fully subscribed. The company has strong fundamentals and allocation should not be a problem given the size of the issue," said Sunil Shah, managing director, HDFC Securities.

The merchant bankers to the issue have left no stone unturned to sell it. They have lined up roadshows in more than 25 cities in the country and 12 abroad such as New York, London, Hong Kong and Singapore.

Meanwhile, the IBP offer price has been set at Rs 620 per share, with a 5 per cent discount for retail investors. This is expected to add Rs 350 crore to the government's kitty.

While 50 per cent of the shares have been allocated to retail investors, including non-institutional bidders, the remaining will be allotted to qualified institutional bidders. Nearly 30 per cent of the offer size has been allocated to individuals.

The public offer for the sale of 5.76 million IBP shares was subscribed 2.8 times and the subscription amount received is estimated at around Rs 1,000 crore. The offer, which closed on March 1, received 87,000 applications.