IOC stake sale at 10% discount; govt hopes to rake in Rs 5,300 cr

An Empowered Group of Ministers met today to finalise the price of Indian Oil shares to be sold to ONGC and Oil India. Both these companies will pick up 5 per cent each in IOC at a 10 per cent discount. At the current market price, the share sale price will be Rs 220. Stake sale will be through block deal and it will be an offline transaction. The Government expects to get Rs 5,300-5,400 crore through this sale, said Divestment secretary Ravi Mathur. “Yes, 10 per cent,” Oil Minister Veerappa Moily said when asked if the IOC share sale will happen at a discount to market price. “The two companies (ONGC and OIL) will now work out the deal and the stake sale will happen very shortly. It should be happening in next few days. The government advises the board and the two boards will meet and decide. It will be an off—market deal,” Oil Secretary Vivek Rae told reporters after an EGoM meeting. IOC shares were trading at Rs 249 in morning trade on the BSE, up Rs 1.05 apiece, valuing the company at Rs 60,456 crore. IOC shares have gained more than Rs 37 apiece since January 16, when the EGoM on disinvestment cleared the stake sale in the nation’s largest oil firm through a block deal. The EGoM had then cleared the stake sale at current market price, plus/minus 1 per cent. ONGC and OIL, however, wrote to the Petroleum Ministry saying they would each buy a 5 per cent stake in IOC at the six—month average traded price and not at the current rate. The government then decided to offer the IOC shares at 10 per cent discount to current market price to the companies through an off—market deal. ONGC currently holds an 8.77 per cent stake in IOC. Although the Cabinet had originally cleared the stake sale in IOC through an offer for sale, the Finance Ministry had to go in for the block deal route after opposition from the Petroleum Ministry. The Oil Ministry had argued that IOC shares should not be sold through an offer for sale as the current price did not reflect the right valuation of the company. Source :  http://www.thehindubusinessline.com/markets/ioc-stake-sale-at-10-discount-govt-eyes-rs-5300-cr/article5735599.ece