ONGC auction gets bid for Rs 8,500 cr worth shares

Mumbai: The auction for sale of government`s 5 per cent stake in Oil and Natural Gas Corporation, India`s biggest energy explorer, on Thursday got bids for 29.22 crore shares worth about Rs 8,500 crore, but could fetch only about two-third of the targetted proceeds of over Rs 12,000 crore.

At the end of the one-day auction, the auction got total bids for 29.22 crore shares, including 19.92 crore on the NSE (National Stock Exchange) and about 9.3 crore on the BSE (Bombay Stock Exchange) platform, exchange official said. The final figures were yet to be updated on the websites of the two bourses.

The government had proposed to sell about 42.77 crore shares through the auction at a floor price of Rs 290 a piece. The total bids were worth about Rs 8,500 crore and accounted for 68.3 per cent of the total offer size.

In the event of the total number of orders received at or above the floor price being less than the number of shares being offered for sale, the government would have the right to either conclude the sale to the extent of subscription or cancel the sale.

The shares would be allocated on `price-priority` basis, meaning the bidders at highest price would be allotted shares.

The bids were mostly in the price range of Rs 290-293 per share for the auction, which commenced at 0915 hours and closed at 1530 hours on Thursday. The government had fixed a floor price of Rs 290 per share for the share sale through this one-day auction, wherein it was targetting to raise about Rs 12,000-13,000 crore.

The bidding began on a weak note and only about 37,500 shares were bid for in the first hour. Till 1500 hours also, total bids had come in for only about 1.43 crore shares, but the momentum picked up in the last 30 minutes.

After an initial spike of about one per cent, ONGC shares had also turned weak and even slipped below Rs 290 level by afternoon trade. The stock finally closed 1.87 per cent down at Rs 287.85 at the BSE.

Analysts said that a poor response to the bidding could be attributed to the fact that ONGC shares were trading very close to the offer price in the secondary market and even slipped below the floor price by afternoon trade.

The government on Tuesday decided to offload five per cent stake in ONGC through the auction route and the planned sale could fetch the government about Rs 12,000-13,000 crore. The government owns 74.14 per cent stake in ONGC and has proposed to sell 427.77 million shares or 5 per cent equity.

The BSE (Bombay Stock Exchange) was the designated exchange for the proposed share sale, but orders were placed on both the BSE and NSE (National Stock Exchange).

The sale of shares took place at a separate window of the two bourses. Any modification or cancellation of the orders would not be allowed in the last 30 minutes. No single buyer, other than mutual funds and insurance companies, would be allocated more than 25 per cent of the size of the offer.