State-owned Oil and Natural Gas Corporation's (ONGC) much-delayed Rs 12,000 crore follow-on public offer
may open on September 20 or 27.
"ONGC Board approved the red herring prospectus (RHP) on Monday, which will be filed as per the instructions of the government," ONGC Chairman and Managing Director A K Haziraka told reporters in the national capital.
The red herring prospectus
(RHP) is likely to be filed with market regulator Securities and Exchange Board of India (Sebi) on September 5.
The follow-on public offer (FPO), through which the government is selling 5 per cent of its stake
in ONGC, may open on September 20 or 27.
"Keeping the strong fundamentals of ONGC in view, we are confident that the response from the investors will be overwhelming," he said.
On August 29, ONGC's board approved the RHP after incorporating the company's financial results for the April-June quarter. The government plans to sell 5 per cent, or 427.77 million shares, through the FPO.Disinvestment money to no longer fund capex: Pranab
"We are prepared for the FPO and we are awaiting a signal from the Department of Disinvestment, as this is the government's share sale," the official said.
The FPO was originally planned in the 2010-11, but was later deferred to April 5 as the company did not have an adequate number of independent directors on its board to meet market regulator Sebi's listing norms.
It was then rescheduled for July 5, but was again deferred due to adverse market conditions.
The government had in January appointed Citigroup, Nomura Holdings, Bank of America Corp, HSBC Holdings, JM Financial Services and Morgan Stanley to manage ONGC's share sale.
Following the FPO, the government's stake in ONGC will come down to 69.14 per cent from the current 74.14 per cent.
The government's ad-hoc subsidy sharing mechanism has cast a shadow over ONGC's share sale during recent months.
Oil and gas producers like ONGC have to make good a part of the revenues that fuel retailers lose on selling diesel, domestic LPG and kerosene at government-controlled rates. The discount that ONGC gives to IOC, BPCL and HPCL on the crude oil it sells to them is decided on a quarter-to-quarter basis.
Hazarika said he expects the upstream burden to be one-third of the revenues loss on fuel sales.
During the April-June quarter, upstream firms shouldered one-third of state-run oil marketing companies' over Rs 43,000 crore revenue loss on fuel sales. Upstream firms contributed Rs 30,297 crore out of the total revenue loss of Rs 78,189 crore in 2010-11. Of this, ONGC's share was Rs 24,892 crore.