IOC follow-on offer on hold due to high crude prices

State-run Indian Oil Corporation on Thursday said its Rs 20,000-crore public offer is on hold due to unfavourable market conditions and rising global crude oil prices.

“We found in September/October (that) global oil prices (had) started rising and inflation is also high,” IOC Chairman Mr S V Narasimhan told reporters explaining the reasons for putting the follow-on public offer (FPO) on hold.

“I don’t think it is feasible at this stage to think of an FPO,” he said.

The FPO, previously planned for first quarter of 2011 calendar year, involved a 10 per cent stake sale by the government and an equal number of new shares by IOC. IOC had even appointed six merchant bankers for the sale of 10 per cent equity shares in the FPO.

“There is no timeframe (to launch the FPO) at the moment,” he said, adding the company is still awaiting government approval for the share sale.

Following the stake sale, the government’s holding in IOC would reduce to 64.57 per cent from the existing 78.92 per cent. The twin share sale programme was expected to garner close to Rs 20,000 crore.

IOC had hired six investment banks — Merrill Lynch, Citigroup, ICICI Securities, Morgan Stanley, SBI Capital and UBS to manage the public offer.

The mega offer was part of the government’s Rs 40,000 crore disinvestment programme for the current financial year.

Under the follow-on public offer, the government was to divest a 10 per cent stake in the company, translating into 24.27 crore equity shares. In addition, the company would have also issued fresh equity equivalent to another 10 per cent stake in the company, amounting to 19 crore shares.