The Hindu Business Line : IOC to soon finalise merchant bankers for sale of ONGC, GAIL stake

INDIAN Oil Corporation is in the process of appointing merchant bankers for sale of part of its shareholding in Oil and Natural Gas Corporation and GAIL (India) Ltd.

The company, which had invited bids to appoint merchant bankers to handle the sales through financial institution, is also weighing the option of appointing separate advisors for the transactions in ONGC and GAIL, a company executive said. A decision is expected soon, he added, but declined to disclose the names of the merchant bankers shortlisted.

Almost 13 merchant bankers had made presentation of which four were shortlisted, the executive told Business Line. Indications are that for the sale of up to 20 per cent of its stake in ONGC, Indian Oil has invited bids from Kotak Mahindra, Citi Financials and JM Morgan. In addition to these three merchant bankers, the SBI Caps-CLSA combine has also been asked to submit price bids for up to 50 per cent sale of its stake in GAIL.

Indian Oil holds 13.7 crore-equity shares or 9.61 per cent stake in ONGC and 4.08 crore-equity shares or 4.83 per cent in GAIL. The board of the company on December 28 had approved sale of up to 20 per cent of its stake in ONGC and up to 50 per cent in GAIL this fiscal. This was subject to approval of the competent authorities — the Ministry of Petroleum and Natural Gas.

The Government had in November last year given in-principle nod to oil PSUs ONGC, IOC and GAIL to offload the cross-holdings in each other. ONGC holds 9.1 per cent of IOC and 4.8 per cent of GAIL's equity, while IOC holds 9.6 per cent of ONGC and 4.8 per cent of GAIL's equity. GAIL, in turn, holds 2.4 per cent in ONGC.

This decision to offload was taken as oil PSUs felt that investments were locked in small holdings without serving any business or strategic purpose. The offloading was expected to meet the requirement of funds by these PSUs for capital expenditure. The current market value of the holdings is estimated to be over Rs 25,000 crore.