The Hindu Business Line : ONGC public offer: `A good deal for retail'

WITH institutional investors lapping up the ONGC stock within minutes of the issue hitting the market, a highly elated Government feels that retail investors should now see value in the scrip and subscribe to the offer for making it a grand success.

"Compared to the prevailing market prices, our price is much less. Our maximum value finally will be Rs 712.50 per share (after giving a 5 per cent discount to retail investors on Rs 750 per share) whereas the ONGC stock is currently trading around Rs 800 per share. There is a huge difference already which will only increase. The retail investors should see value in the stock and start subscribing in a big way," a senior Government official said.

The mega offer for sale of 10 per cent Government stake in ONGC was oversubscribed by 1.07 times within 45 minutes of the launch of the issue on Friday. "Most of the initial interest has come from institutional investors. Retail demand will only come later," the official noted.

The thumping response from the investors has led the Government to believe that the issue will end up a huge success by the time it closes on March 13. "The market is looking good. The share prices of associate companies are also looking up. We are hoping that the offer will do very well," he added.

The Government had fixed a price band of Rs 680-750 per share for the sale of 14.27 crore shares of ONGC through a 100 per cent book-built public offer, billed the largest-ever in India's corporate history and perhaps one of the largest globally.

The Government hopes to mop-up over Rs 10,000 crore by selling its stake in the Fortune 500 company.

The Government has earmarked 10 per cent of the public offer each for employees or whole-time directors and shareholders of ONGC and its subsidiary, Mangalore Refinery and Petrochemicals Ltd (MRPL).

The retail investors, who apply for up to Rs 50,000, will be given a five per cent differential lower price compared to the price discovered through the book building process.

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