Stocks

ONGC follow-on issue likely in April

Richa Mishra Tania Kishore New Delhi/Mumbai | Updated on March 03, 2011

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The much hyped ONGC's follow-on public offer (FPO) is now expected to open on April 5. The FPO was expected to hit the market this month, a senior official told Business Line.

One of the reasons cited for the deferment of the FPO is the delay in appointment of independent directors on the company's board to meet SEBI requirements.

The Government proposes to divest 5 per cent of its stake in ONGC which would bring down its stake to 69.14 per cent. The Government expects to mop up over Rs 10,800 crore through the FPO.

According to a new timeline, the FPO would open on April 5 and close on April 8. The price band for the FPO is expected to be decided around April 1 by a group of ministers headed by the Finance Minister, Mr Pranab Mukherjee.

First indications of the FPO being deferred came in the Budget for 2011-12, when the Finance Minister said that against a target of Rs 40,000 crore, the Government will raise about Rs 22,144 crore from disinvestment in 2010-11.

“A higher than anticipated realisation in non-tax revenues has led us to reschedule some of the divestment issues planned for the current year,” he said.

A merchant banker with the issue, too, confirmed that the issue has been pushed to the next fiscal.

Mr Sumit Bose, Divestment Secretary, said the red herring prospectus will be filed two to three weeks before the opening of the issue. He, however, did not confirm if the issue has been deferred to the next fiscal year.

Mr Bose said as the offer documents will be filed through the fast-track system, the company will only have to file a red herring prospectus. The company is working on the Clause 49 issue. He added that It does not have the mandatory number of independent directors needed to conduct the share sale.

The shares of ONGC closed down 1.52 per cent at Rs 269.60 on BSE on Thursday.

Published on March 03, 2011

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