Arab Today, arab today ongc share sale gets lukewarm response
Last Updated : GMT 01:15:42
Arab Today, arab today
Arab Today, arab today

ONGC share sale gets lukewarm response

Arab Today, arab today

Arab Today, arab today ONGC share sale gets lukewarm response

Mumbai - Arabstoday

India’s failure to sell all of the shares in its $2.6 billion auction of a 5 per cent stake in Oil and Natural Gas Corporation (ONGC) is an embarrassing setback in its effort to revive stock sales in state companies to trim a yawning fiscal deficit. The government’s handling of the share sale, seen as a litmus test for its stalled privatisation agenda, was widely slammed as being aggressively priced, poorly marketed and shoddily executed, with bid details plagued by confusion. ONGC shares fell more than 2 per cent on Friday, a day after the government sold just 98.3 per cent of the shares on offer. State-run Life Insurance Corp of India (LIC) took up more than half the offer, a banking source with direct knowledge said, while some media reports said the insurer had bought close to 90 per cent of the shares. A senior official at LIC declined to comment. “It is bad management, and should not have happened. No one wants this mess happening again,” Pronab Sen, principal adviser at India’s Planning Commission, told Reuters in New Delhi. “They have to tighten how the disinvestment happens,” he said. The government hoped to follow up the ONGC sale by unloading shares in Bharat Heavy Electricals, Steel Authority of India and Oil India but will need to rethink how it manages and prices those deals. The floor price for the ONGC auction, set at 290 rupees late on Tuesday, was at a 2.3 per cent premium to the day’s closing price, prompting widespread criticism that it should have been priced at a discount. Analysts blamed the deal’s bankers and the stock exchanges as well as the government for poorly managing the auction. “The pricing was not favourable in terms of the market scenario we are operating in. They should have left something on the table for investors,” said Jigar Shah, head of research at Mumbai’s Kim Eng Securities. The government said it received valid bids for 420.42 million shares, at a volume weighted average price of 303.67 rupees per share, raising a total of 127.67 billion rupees ($2.57 billion). The government had offered 427.77 million shares. A lack of clarity on how much of India’s hefty oil subsidies would be borne by ONGC was a key deterrent to more interest from foreign institutions, bankers and analysts said.

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Arab Today, arab today ongc share sale gets lukewarm response Arab Today, arab today ongc share sale gets lukewarm response

 



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