The Hindu Business Line : SEBI nod for ONGC participatory notes

THE Securities and Exchange Board of India (SEBI) has informed the Government that the associates of book-running lead managers can be allowed to issue participatory notes for the public offer for sale of 10 per cent equity in ONGC, which is set to open on March 5.

"The SEBI had written to the Disinvestment Ministry on February 27 stating that the associates of lead managers can be allowed to issue participatory notes subject to certain caveats including disclosure norms. The market regulator has asked the Government to enforce these caveats if it decides to allow the associates of lead managers to issue participatory notes for the ONGC offer," a senior Disinvestment Ministry official said.

However, the Government is yet to take a decision on allowing the issue of participatory notes by the associates of lead managers to the ONGC offer. "This would require the Government to lay down new procedures for issuing participatory notes to comply with the SEBI caveats. This has to be worked out, but a decision has not yet been taken in this regard," the official said.

A final decision by the Government on permitting the issue of participatory notes is expected to make the ONGC offer much more attractive to foreign investors.

SEBI currently permits fund managers to issue participatory notes but has barred lead managers from using the instrument whereby foreign funds not registered in India could participate in a public offer.

With the Government pinning its hopes on the ONGC public offer to rake in a major portion of the revised disinvestment target of Rs 14,500 crore for the current fiscal, the Disinvestment Ministry had requested the regulator to permit the associates of lead managers to issue participatory notes.

The public offer for the sale of 14 crore shares in ONGC will open on Friday for which the floor price/price band is likely to be announced on Wednesday.

The Government is looking at a target of more than Rs 10,000 crore from the public offer in ONGC, which is currently traded at Rs 760 per share.

Ministry officials said that the prevailing market price will not be the sole criterion for fixing the floor price/price band for the offer since only 3.9 per cent of ONGC stock is currently subjected to active trading on the domestic bourses.

"We would arrive at a fair price after factoring in the strength of the company and advise from experts," he said.

The Government currently holds 84.11 per cent stake in ONGC while GAIL India and IOC cumulatively hold the remaining 12 per cent in the form of cross-holdings.

The overseas road-shows for the ONGC public offer will begin on March 8 with senior Government officials, including the Disinvestment Secretary, Mr Dhirendra Singh, and the Finance Secretary, Mr D.C. Gupta, and lead managers holding investor meetings in London, New York and Boston to market the issue.

DSP Merill Lynch Ltd, J M Morgan Stanley Pvt Ltd and Kotak Mahindra Capital Company Ltd are the book-running lead managers to the issue.

More Stories on : Regulatory Bodies & Rulings | Disinvestment | Public Offer | Petroleum

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Less savings from outsourcing than expected: Study

Reliance Energy raises $178 m via bonds issue

Prices of HR steel hiked

Defaulters beware, banks might bar you!

Patent challenges: Pharma cos walking a tightrope

Funds' move to trigger open offer for Matrix

Norms set for Indian Depository Receipts
Stiff entry: $100 m capital + reserves, $500 m average turnover

SEBI nod for ONGC participatory notes