ONGC's auction tomorrow, retail investors upset

State-run Oil and Natural Gas Corp will launch on Thursday a share sale through an auction that aims to raise at least Rs 12,000 crore. The offering will close on the same day, the company said.

The government on Tuesday approved the sale through a share auction, Oil Minister S. Jaipal Reddy said, reviving the government’s faltering divestment programme.

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The government will sell 5 percent of its holding, or about 428 million shares, in the offering and the floor price for the issue has been set at Rs 290 a share, a 2.3 percent premium to the current market price.However, the government reserves the right to accept any subscription above floor price and can accept subscription even if it is under subscribed. JM Financial, Citigroup, Merrill Lynch, Nomura, HSBC, Morgan Stanley are bankers managing the auction.

The sale, in which financial institutions are expected to participate, may fetch the hard-pressed government about Rs 12,000-13,000 crore this fiscal.

However, in an interview with CNBC-TV18, former ONGC chairman RS Sharma, said that the auction route is a disappointment for retail investors. “However, the government will get money in faster through auction than FPO or other modes.”

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ONGC shares closed at Rs 283.40 on Tuesday.

With inputs from Reuters