ONGC shares turn weak as bids pour in for govt stake sale
If successful, the takeover will be the largest overseas acquisition by an Indian firm since Tata Motors' 2008 buyout of Jaguar Land Rover.
Shares of ONGC turned weak after an initial spike, as bids came in for around 1.7 lakh shares in the first two hours of an auction for sale of the government's 5 per cent stake in the public sector energy giant.
The one-day auction began this morning at 0915 hours on the stock exchanges and attracted bids for a total of 10.95 lakh shares by 12:33 pm. It has currently got bids for 62,93,624 shares.
Investment bankers said that the early bids came at around Rs 293-294 per share level, but the price fell to near Rs 291-292 after about an hour, as against a floor price of Rs 290 per share.
After touching a high of Rs 296.50 within minutes of the opening of the market with a gain of nearly 1 per cent, ONGC shares pared all their gains. The stock was trading 1.65 per cent down at Rs 291.70 at 12: 33 pm in a weak market.
The early morning gains in ONGC shares were in sharp contrast to the overall weakness in the market. However, the ONGC stock also lost ground as the benchmark Sensex continued to trade in the negative zone with a fall of about one per cent.
The auction is for sale of the government's five per cent stake in the company and would continue till 1530 hours.
The floor price has been fixed at Rs 290 per share and the shares would be allocated on 'price-priority' basis, meaning the bidders at highest price would be allotted shares.
The bids had come for over 37,500 shares in the first hour of the auction at the BSE and the NSE.
A day ahead of the auction, the ONGC stock had settled 3 per cent higher on the bourses at Rs 293.35 on the BSE.
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 floor price, the minimum price for the sale of shares, was over 2 per cent higher than ONGC's closing price of Rs 283.05 on NSE and Rs 283.55 on BSE on Monday.
The BSE is the designated exchange for the proposed share sale, but orders can be placed on both the BSE and NSE.
The sale of shares is taking 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.
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.