The Hindu : ONGC public issue oversubscribed

Online edition of India's National Newspaper
Saturday, Mar 06, 2004

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ONGC public issue oversubscribed

By Sushma Ramachandran

NEW DELHI, MARCH 5. The public issue of 10 per cent of the Oil and Natural Gas Corporation shares was oversubscribed by two times today within 10 minutes of the opening, prompting the Disinvestment Minister, Arun Shourie, to describe it as a milestone for the country. "This series of public issues will redefine India's approach to the capital markets," he said, referring to the six companies where government shareholding is being offered for sale to the public.

He said that a minimum of Rs. 13,100 crores would be raised in these six issues, going by the offer price of those that had closed and the floor price for those still under way.

The ONGC issue which opened today, he said, was over-subscribed by 2.12 times. In other words, applications have been received for over two times the amount of shares offered for sale.

The amount involved in these bids is estimated at $4.85 billion (Rs. 22,000 crores). This is already more than double the Rs. 10,000-crore target for sale of 10 per cent government equity in the company.

At a press conference, Mr. Shourie said that he was not yet aware whether one of the world's biggest investors, Warren Buffet, had made a bid of Rs. 7000 crore. "But if an astute investor like him has put money in ONGC, it is a vote for India."

Asked about the possibility of a special allocation for high profile investment funds such as those owned by Mr. Buffet he said, "I certainly attach importance to such dominant investor funds. Investors like him give a two to three year time horizon for their investments."

Investments by such funds would give a signal to retail investors to follow suit, Mr. Shourie said. At the same time, the Government would abide by the advice of the advisers to the issue.

In this context, he said that placement with large funds had been one of the devices by which China had raised its profile, by which it had established its repute among investors.

"Those who invested in its [China's] stock became its trumpeters, its advocates," he said.

Describing the current series of public issues as a milestone, he said: "In these six weeks we would have raised three and a half times what was raised in the three years — 2000-2003 — and a quarter more than has been raised in the equity market in India since 1998-99."

As a result, the Government is expected easily to meet the target of raising Rs. 14,500 crores through disinvestment in public sector companies in the current financial year.

Till now, Rs. 13,300 crores has been mobilised largely due to the Rs. 1,000 crores raised from the sale of government equity in Maruti Udyog Limited.

Another Rs. 10,000 crores is likely to be mopped up through the ONGC issue, the largest offer ever made to the public. The other companies where the Government has sold its remaining shares in the current round are Indian Petrochemicals Corporation Limited (IPCL) and CMC, which are now owned by the Reliance group and the Tatas respectively.

The Government is offering shares to the public in Gas Authority of India Limited, Dredging Corporation of India Limited and IBP.

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