The government’s fourth disinvestment proposal for this fiscal is a Fortune 500 company — Indian Oil Corporation. It proposes to raise over ₹9,500 crore (at Friday’s closing price of ₹394.45 apiece) by offloading 10 per cent in the public sector refining-cum-retailing giant on Monday.
IndianOil has been on the divestment radar for some time now, but the controlled regime of domestic retail fuel pricing and fluctuating international crude oil prices were dampeners.
However, for the first time in six years IndianOil posted refining margins of over $10 a barrel — similar to private sector peers — during the first quarter of the current fiscal. The company’s borrowings are also down at ₹52,519 crore as on June 30.
In a filing to the BSE, IndianOil said the government will sell 24.28 crore shares via an Offer For Sale. The floor price will be announced on Saturday.
Citibank Global Markets, Deutsche Equities India, Nomura Financial Advisory & Securities (India), JM Financial Institutional Securities and Kotak Securities Ltd will be the brokers.
A minimum 20 per cent of the offer size, or 4.85 crore shares, will be reserved for retail investors.
Retail investors will be offered a five per cent discount to the cut-off price.
The cut-off price will be the lowest price at which the shares on offer are sold determined by the bids received in the non-retail investor category. In the non-retail investor category, 19.42 crore shares will be on offer with a minimum of 25 per cent reserved for mutual funds.
The government now owns 68.57 per cent stake in Indian Oil. Other major stakeholders are ONGC (13.77 per cent), Oil India (5 per cent) and LIC (2.83 per cent).
The government last sold its stake in IndianOil in March 2014 through an off-market transaction offering 5 per cent each to ONGC and Oil India raising ₹5,340 crore. At the time, IndianOil’s shares were trading at ₹269.20.