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The Government will sell over 24.28 crore shares or 10 per cent of its stake in Indian Oil at Rs 387 a piece on Monday. At this price, the Government can get over Rs 9,000 crore.
The floor price is at around 2 per cent discount on Friday’s closing price of Rs 394.45. Any investor can bid on or above the floor price in the share sale to take place between 9.15 am-3.30 pm on Monday. Retail investor (one who is bidding for shares with total value of Rs 2 lakh or less) will have to pay full money at the time of bidding, while for other investors, there will be option to bid by just paying the margin money.
Indian Oil is fourth company to be divested this fiscal after Rural Electrification Corporation, Power Finance Corporation and Dredging Corporation. With the downstream oil company, total proceed from divestment is expected to cross Rs 12,000 crore against the target of Rs 41,000 crore to be mobilised through selling minority stakes in various CPSEs. There is another target of Rs 28,500 crore is planned to be raised through selling strategic stake in CPSEs i.e. selling over 51 per cent and handing over the management.
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.
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.
Citibank Global Markets, Deutsche Equities India, Nomura Financial Advisory & Securities (India), JM Financial Institutional Securities and Kotak Securities Ltd will be the brokers. 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.
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