Government to sell 1.5% in ONGC via Offer for Sale

In a last ditch effort to boost the disinvestment revenues, the central government has decided to sell a total of 1.5% stake in ONGC via an offer for sale (OFS). The 1.5% stake sale is likely to fetch a sum of Rs.3,000 crore. The OFS would be spread out over 2 days.

The government will sell 0.75% to non-retail investors on 30-March and the balance 0.75% will be sold to the retail investors on 31-March, taking the aggregate to 1.5% stake sale in ONGC.

In terms of specific number of shares, government will sell 9,43,52,094 (9.435 crore) equity shares of ONGC or 0.75% of paid-up equity share capital on March 30th, 2022 to non-retail investors. A similar OFS will be offered to retail investors on March 31st, 2022 to sell another 9,43,52,094 equity shares.

Check - ONGC Share Price

The floor price of the ONGC OFS has been fixed at Rs.159 per share, which represents a discount of 7% to the current market price.

Currently the government of India owns 60.41% stake in ONGC and post the OFS, its stake in ONGC will reduce to 58.91%. Incidentally, ONGC producers more than half the total output of oil and gas in India.
 

Out of the overall OFS, a total of 25% of the shares will be earmarked for mutual funds and domestic insurance companies while 10% will be reserved purely for the retail investors. There is also a small quota reserved for the employees of ONGC.

Of course, the total fund raising of Rs.3,000 crore will hardly make any meaningful difference to the disinvestment revenues of the government. Government had originally set a disinvestment target of Rs.175,000 crore for FY22, which was scaled down to Rs.78,000 crore in Budget 2022.

However, with the LIC IPO not happening in this year, even that looks steep. Till date divestments and buybacks by PSUs have generated Rs.19,499 crore only.