Govt to sell 10% stake in Indian Oil Corp on Monday

The government will sell a 10-per cent stake in state-run oil marketing company Indian Oil Corp Ltd, on Monday, through an auction on the stock exchanges, according to a regulatory filing.

The offer will open on 24 August, the company stated in a filing with stock exchanges.

The government is looking to sell up to 242.79 million shares of Indian Oil Corp through the offer for sale route.

At the current market price of the stock, the sale of a 10-per cent stake would help the government raise about Rs9,890 cr ($1.5 billion). This is based on the 15-day average price of the stock, which works out to Rs407.35.

The floor price for the share sale will be announced on Monday, 22 August

The government currently holds 68.57-per cent stake in the firm. Post divestment, this will come down to 58.57 per cent.

Citigroup Global Markets India Pvt. Ltd, JM Financial Institutional Securities Ltd, Deutsche Equities India Pvt Ltd, Kotak Mahindra Capital Co Ltd and Nomura Financial Advisory and Services (India) Pvt Ltd are managing the issue.

This will be the fourth divestment issue by the government this fiscal and the second this month. Earlier, it had divested stake in Rural Electrification Corp Ltd (REC), Power Finance Corp Ltd (PFC) and Dredging Corp of India Ltd.

On Friday, the government raised Rs53.4 crore from the divestment of its stake in Dredging Corp, while the PFC stake sale raised Rs1,600 crore last month and the REC sale raised Rs1,610 crore in April.

The government is also looking to appoint bankers for divesting a 10-per cent stake in Coal India Ltd, which could fetch it up to Rs23,000 crore.

Bankers have also been appointed for the sale of stakes in NTPC Ltd, Bharat Electronics Ltd, Engineers India Ltd, Nalco Ltd and Hindustan Copper Ltd.

Receipts from divestment have been estimated at Rs41,000 crore this year. Also, additional resource mobilisation of Rs28,500 crore has been estimated from strategic divestments to meet revenue shortfall.

In 2014-15, the government had set a target of Rs63,425 crore from stake sales, of which it collected only Rs31,350 crore, including Rs5,000 crore from the sale of special drawing rights to the Reserve Bank of India.

Shares of Indian Oil fell 0.70 per cent to Rs394.45 on BSE, while the benchmark Sensex shed 0.88 per cent to close at 27,366.07 points.