Govt to sell 10% stake in Indian Oil Corp on August 24

Despite volatility in domestic and global bourses, the Centre is set to sell 10 per cent stake in the country’s largest oil refining and marketing company – Indian Oil Corporation on August 24 that is expected to raise over Rs 9,500 crore.

At the floor price, the 10% stake sale in the company will bring in Rs9,396 crore ($1.4 billion) for the government.

The government would sell 24.27 crore shares in IOC through the offer for sale (OFS) route.

Citigroup, Deutsche Bank, Nomura and Indian investment banks JM Financial and Kotak Securities are the managers of the Indian Oil Corporation’s share sale.

That may lure investors to the share sale and allow Prime Minister Narendra Modi to mobilize funds to spend on various welfare programs in Asia’s third-largest economy.

Stake sale in IOC will be the fourth disinvestment this fiscal and the biggest so far. The stock has rallied 19% this year, extending a 55% surge in 2014.

“The government has received excellent feedback from the merchant bankers for the divestment in Indian Oil Corp”, Disinvestment Secretary Aradhana Johri said.

The government last sold its stake in IndianOil in March 2014 through an off-market transaction offering 5 per cent each to ONGC and Oil India raising ₹5,340 crore.

It has mopped up close to Rs 3,300 crore from these sales.

The government is targeting Rs 41,000 crore from selling small stakes in state-run companies. Retail investor (one who is bidding for shares with total value of Rs 2 lakh or less) will have to pay full money at the time of bidding, while for other investors, there will be option to bid by just paying the margin money.

So far in this financial year, the government has sold 5 per cent stakes in Rural Electrification Corporation, Power Finance Corporation and Dredging Corporation of India.