Government begins stake sale in ONGC

By: | Updated: 01 Mar 2012 01:13 AM

Mumbai: Shares
of ONGC turned weak after an initial spike, as bids came in for about 1.7
lakh shares in the first two hours of an auction for sale of the
government’s 5 per cent stake in the public sector energy giant.

one-day auction began this morning at 9.15 a.m. on the stock exchanges and
attracted bids for a total of 1.67 lakh shares by 11.20 a.m.

bankers said that the early bids came at around Rs. 293-294 per share
level, but the price fell to near Rs. 291-292 after about an hour, as
against a floor price of Rs. 290 per share.

After touching a high
of Rs. 296.50 within minutes of the opening of the market with a gain of
nearly 1 per cent, the ONGC shares pared all their gains. The stock was
trading 0.7 per cent down at Rs. 291.20 at 11.40 a.m. in a weak market.

early morning gains in ONGC shares were in sharp contrast to the overall
weakness in the market. However, the ONGC stock also lost ground as the
benchmark Sensex continued to trade in the negative zone with a fall of
about one per cent.

The auction process for sale of the
government’s 5 per cent stake in the company and would continue till
3.30 p.m.

The floor price has been fixed at Rs. 290 per share and
the shares would be allocated on ‘price-priority’ basis, meaning the
bidders at highest price would be allotted shares.

The bids had
come for over 37,500 shares in the first hour of the auction at the BSE
and the NSE.

A day ahead of the auction, the ONGC stock had
settled 3 per cent higher on the bourses at. Rs 293.35 on the BSE.

government on Tuesday decided to offload 5 per cent stake in ONGC through
the auction route and the planned sale could fetch the government about
Rs. 12,000-13,000 crore.

The government owns 74.14 per cent stake
in ONGC and has proposed to sell 427.77 million shares or 5 per cent

The floor price, the minimum price for the sale of
shares, was over 2 per cent higher than ONGC’s closing price of Rs.
283.05 on NSE and Rs 283.55 on BSE on Monday.

The BSE is the
designated exchange for the proposed share sale, but orders can be placed
on both the BSE and NSE.

The sale of shares is taking place at a
separate window of the two bourses. Any modification or cancellation of
the orders would not be allowed in the last 30 minutes.

No single
buyer, other than mutual funds and insurance companies, would be allocated
more than 25 per cent of the size of the offer.

In the event of
the total number of orders received at or above the floor price being less
than the number of shares being offered for sale, the government would
have the right to either conclude the sale to the extent of subscription
or cancel the sale.

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First Published: 01 Mar 2012 01:13 AM
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