OIL seeks to net Rs5000 crore as IPO opens on 7 September

The government has fixed a price band of Rs950-1,050 a share for Oil India Ltd's initial public offering (IPO). This decision was taken by a group of ministers headed by the finance minister Pranab Mukherjee.

The IPO will open on 7 September and close on 10 September. Oil India is likely to be listed on 29 September. OIL, which produces 3.5 million tonne of oil annually, will offer fresh equity of 2.64 crore shares or 11 per cent, while the government will put on offer 10 per cent of its stake in OIL to the public sector refining-cum-marketing companies - Indian Oil Corporation, HPCL and BPCL.

The IPO offer coupled with direct divestment of government stake to public sector oil refining and marketing companies is expected to raise about Rs5,000 crore (at the ceiling rate), official sources said. The IPO will generate Rs2,772 crore for the company and direct stake sale is expected to get the government another Rs2,247 crore.

Subsequent to the IPO and disinvestment, the government's stake in OIL will decrease from 98.13 per cent to 78.43 per cent.

From the direct disinvestment of 10 per cent in Oil India, the Government will sell about 5 per cent stake to IOC and about 2.5 per cent each to HPCL and BPCL.

OIL's director for finance T KAnanth Kumar told Reuters, "We have set an exploration and production programme for the next two years where we will use the IPO proceeds," he said.

Oil India's IPO follows the strong appetite showed for state utility NHPC Ltd's IPO, which closed subscribed more than 23 times.