ONGC, OIL will buy 5 per cent each in Indian Oil Corporation. The Government will sell 5 % stake in BHEL through a block deal to LIC
The government, on Friday, cleared disinvestment in two blue-chip state-owned companies Indian Oil Corporation (IOC) and Bharat Heavy Electricals Limited (BHEL), which would fetch over Rs.7,300 crore to the exchequer in the current fiscal.
The decision to go ahead with the stake sale of 10 per cent in IOC and 5 per cent in BHEL was taken by the Empowered Group of Ministers on disinvestment, headed by Finance Minister P. Chidambaram.
No timeline for the stake sales, however, has been decided as yet, sources said.
The government will be selling 10 per cent stake in IOC to state-run ONGC and Oil India Ltd (OIL) at a discount of 10 per cent, which would fetch about Rs.5,300 crore to the exchequer.
The sale of 10 per cent stake or 24.27 crore shares will be through an off-market transaction, with ONGC and OIL buying 5 per cent stake each.
“The two companies (ONGC and OIL) will now work out the deal, and the stake sale will happen shortly. It should be happening in the next few days. The government advises the board, and the two boards will meet and decide. It will be an off-market deal,” Oil Secretary Vivek Rae said.
IOC shares closed at Rs.248.10, up 0.06 per cent on BSE on Friday.
“We expect to raise around Rs.5,300 crore from the IOC stake sale,” Disinvestment Secretary Ravi Mathur said.
As regards BHEL disinvestment, the government will sell 5 per cent of its stake through a block deal to state-owned LIC, which would fetch about Rs.2,045 crore to the exchequer.
“BHEL disinvestment will happen this fiscal through the block deal to LIC,” Mr. Mathur added.
At the current market price of Rs.167.20, the sale of 5 per cent stake, or 12.23 crore shares, in BHEL would fetch about Rs.2,045 crore to the exchequer.
The Department of Heavy Industries, which is the administrative Ministry of the company, has, for long, opposed the proposed disinvestment in state-run BHEL, citing unfavourable market conditions.
In August, 2011, the Cabinet had cleared selling government’s 5 per cent stake in BHEL through the follow-on public offer (FPO). The government holds 67.72 per cent stake in the Navratna company.
However, market conditions led to a delay in the issue, and the company in April, 2012, withdrew the draft prospectus filed with the Securities and Exchange Board of India.
The government has so far raised about Rs.5,093.87 crore through the stake sale in PSUs. As per the revised estimates in the Interim Budget, the disinvestment target was lowered to Rs.16,027 crore in this financial year from Rs.40,000 crore