Mumbai: A share sale in state-run Oil & Natural Gas Corp is likely to be delayed to the first week of April from an earlier launch date of 15 March, three sources with direct knowledge of the matter said.
The share sale, expected to raise up to $2.8 billion, is part of a wider plan by the Indian government to sell stakes in about 60 state-run firms over the next few years to cut its fiscal deficit and garner funds for social welfare programmes.
ONGC is not the first to delay a share sale this year. Steel Authority of India and Indian Oil Corp delayed their share sales to the next fiscal year due to weak market conditions.
India’s benchmark Sensex is down 10% in 2011, with foreign institutional investors pulling $2.2 billion out of Indian equities this year after pouring in a record $29 billion in 2010, deterred in part by a spate of corruption scandals that has soured sentiment.
ONGC, the country’s second-most valuable listed firm with a market capitalisation of over $52 billion, is yet to complete some regulatory formalities, which are expected to be sorted out in the next few weeks, two of the sources said.
“We thought it would be good to launch it in early next month than rushing with it towards the end of the fiscal year,” one of the sources said. ONGC is likely to file the draft prospectus for the share sale with the regulator later this month, and the share issue is likely to open by 5 April, one of the sources said.
The Indian government, which owns 74.14% of ONGC, plans to sell 5% of its stake in the offer.
India aims to generate Rs40000 cr ($8.9 billion) through share sales next fiscal year, with a major chunk likely in the first quarter, divestment secretary Sumit Bose told Reuters last week.
Shares in ONGC closed 1.5% lower on Thursday. The shares are down nearly 17% so far this year.
Bank of America Merrill Lynch, Citi , HSBC , JM Financial , Morgan Stanley and Nomura are the managers for the ONGC share sale.