Govt clears Oil India Ltd's IPO, divestment
Posted on: 10:45 PM IST Aug 30, 2007
New Delhi: The Centre on Thursday approved the initial public offer (IPO) along with sale of government equity in public sector explorer Oil India Ltd.
The Cabinet Committee of Economic Affairs cleared the IPO of 10 per cent fresh equity as well as sale of 10 per cent of the government's existing shares, PTI quoted Finance Minister P Chidambaram as saying after the CCEA meeting.The state-run company will also offer one per cent of its stake to employees, he said.Of the government's existing stake, five per cent would be offered to Indian Oil Corporation, and 2.5 per cent each to Hindustan Petroleum (HPCL) and Bharat Petroleum (BPCL)."We will appoint the lead managers and conduct road shows," he said, when asked when would the issue hit the stock market.In addition, it approved divestment of 10 per cent of OIL's paid up capital in favour of Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum. While IOC would be given half of this stake (or five per cent), HPCL and BPCL would be given the remaining shares in an equal ratio. Chidambaram said the price band would be approved by an Empowered Group of Ministers on disinvestment already constituted by the government. The price of shares for IPO and oil marketing companies would be same."The divestment would not only strengthen their existing synergies but would also help them to raise resources by disposing these shares in the open market at an opportune time to tide over their under-recoveries," Chidambaram said. Oil India follows other PSUs like Power Finance Corp and Power Grid Corp of India Ltd (PGCIL), which have seen partial divestment of the government's stake. While PFC was listed on the bourses earlier this year, PGCIL will hit the market next month. At present, the government holds 98.13 per cent in the company, while the employees own the remainder.