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Business News/ Companies / Govt chooses five bankers for ONGC share sale
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Govt chooses five bankers for ONGC share sale

HSBC, UBS, Citibank, Kotak Mahindra Bank and ICICI Securities are chosen by the govt for ONGC share sale

Under the divestment proposal for ONGC, the government plans to sell 427.7 million shares amounting to Rs18,300 crore at Monday’s closing price of Rs428.75 per share. Photo: ReutersPremium
Under the divestment proposal for ONGC, the government plans to sell 427.7 million shares amounting to Rs18,300 crore at Monday’s closing price of Rs428.75 per share. Photo: Reuters

Mumbai: HSBC Ltd and UBS AG are among the five banks chosen by the government to advise it on the proposed 5% stake divestment in state-owned Oil and Natural Gas Corp. Ltd (ONGC).

Other banks chosen to manage the offer for sale are Citibank NA, Kotak Mahindra Bank Ltd and ICICI Securities Ltd, according to two bankers aware of the development.

While the total number of banks in the fray to manage the sale was not immediately known, the two bankers confirmed that bankers gave detailed presentations to the department of disinvestment (DoD) on Monday out of which finally five were short-listed. The bankers declined to be named.

The department, which operates under the finance ministry, is mandated to meet an ambitious Rs58,425 crore divestment target of the government announced by finance minister Arun Jaitley in his 10 July budget speech.

Under the divestment proposal for ONGC, the government plans to sell 427.7 million shares amounting to Rs18,300 crore at Monday’s closing price of Rs428.75 per share.

The offer for sale comes in the backdrop of uncertainty over natural gas pricing and the subsidy-sharing mechanism under which ONGC shares a part of the burden on oil marketing companies from having to sell petroleum products at below production cost.

“This is a government asset and they can take a call but what we have suggested is that unless the subsidy sharing mechanism is sorted (out) and natural gas prices are hiked, the valuation from the share sale could be lower," said A.K. Banerjee, director, finance, ONGC.

The company’s OFS met with a lukewarm response in 2011-12 when the United Progressive Alliance (UPA) government had tried to sell a similar 5% stake or 427.7 million shares to raise Rs12,600 crore. The market gave a thumbs down to the offer and state-owned Life Insurance Corp. of India (LIC) pumped in Rs4,000 crore to salvage the sale.

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Published: 25 Aug 2014, 10:20 PM IST
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