New Delhi: The country’s second biggest state-run energy explorer Oil India Ltd (OIL) may sell shares in an initial public offering (IPO) by September, taking advantage of the stock market’s gains after the re-election of Manmohan Singh’s government.
“There is no change in OIL’s plan to offer 10% of its equity to the public,” chairman and managing director N.M. Borah, based in Noida, said by phone on Tuesday. The Union government will sell another 10% to state-run refiners, including Indian Oil Corp. Ltd, he said.
“Now that the markets are looking up and the new government is in place, we will work towards the IPO,” Borah said. “We hope the markets continue to be strong.”
The government will sell stakes in companies as promised by the ruling Congress party’s election manifesto, P. Chidambaram, who was in charge of finance and home in Singh’s previous administration, had said on 18 May. Singh, the first prime minister to win re-election after serving a full term since 1971, doesn’t need the support of Communist law makers who oppose the sale of the government’s stake in companies.
The explorer has started discussions with bankers, including HSBC Securities and Capital Markets (India) Pvt. Ltd, JM Financial Ltd, Citigroup Global Markets India Pvt. Ltd and Morgan Stanley India Services Pvt. Ltd, to complete the share sale plans, Borah said.
The new administration could start by resuming share sale plans for OIL, NHPC Ltd— India’s largest producer of hydroelectricity—and fuel retailer Hindustan Petroleum Corp. Ltd, according to Mumbai-based brokerage Religare Capital Markets Ltd.
Singh may sell $20 billion (Rs95,200 crore) of state assets in the next five years as he tries to plug a budget shortfall, said Rashesh Shah, chief executive of Edelweiss Capital Ltd.
OIL has approval from market regulator Securities and Exchange Board of India (Sebi) to sell shares, Borah said.
“If possible, we would like to have the IPO before the Sebi clearance expires on 10 September, or else it would be a waste of effort,” he added.
The explorer produced 10.4% of India’s domestic crude output in the year ended 31 March, according to the oil ministry’s website.