ONGC sale shows govt using LIC as last-resort buyer
06 Mar 2012
The government is using the state-run insurer as a cash cow to the detriment of the average policy holder, say experts.
State-owned Life Insurance Corp has picked up as much as 4.4 per cent of the government's 5 per cent stake divestment in Oil & Natural Gas Corp, according to reports emerging today.
LIC has acquired 377.10 million shares – over 88 per cent of those on offer – giving it a 4.41 per cent stake in ONGC.
The stake sale on 1 March brought Rs12,721.5 crore into the government's coffers, though it sold just 98.3 per cent of the shares on offer.
Other investors in the auction, in which the floor price was set at a premium to the prevailing market price, haven't yet been identified; but State Bank of India is virtually known to be the only other major bidder.
The allotment figures confirmed earlier reports that the stake sale attracted few institutional buyers willing to pay even the floor price of Rs290 per share.
