Mystery ends; ONGC auction is through, says govt

New Delhi/Mumbai: After some hiccups and a late government intervention, the sale of government's 5 per cent stake in ONGC through an auction finally managed to sail through with an estimated proceeds of about Rs 12,000 crore to

partly meet the disinvestment target of current fiscal.

Hectic parleys were held for more than four hours after the end of the auction process at 1530 hours and a final tally of the bids remained elusive for that time.

Late in the night, top finance ministry officials confirmed that the share sale has been a success and the government has raised the desired proceeds from the auction.

After putting the final bid tally after the end of the auction at about 22.9 crore shares, as against total offer size of 42.77 crore shares, the stock exchanges also later said that the issue has got fully subscribed in the auction, where the floor price was fixed at Rs 290 a piece.

Speaking to reporters, Additional Secretary in Department of Disinvestment Siddharth Pradhan said that the issue has got fully subscribed and the market regulator Sebi has been asked to look into the technical glitches due to which some bids could not get registered. Till about 9 pm the stock exchange data continued to show that the issue had failed to receive the desired bids.

As reports earlier in the day were not encouraging with bids worth only about Rs 8,500 crore, the government appears to have nudged the public sector giants, including LIC, to pitch in with their bids and help the issue sail through.

Pradhan said that the bids should have come in for shares worth about Rs 11,800-11,900 crore and the final proceeds could go even beyond Rs 12,000 crore after all the tabulation.

The glitches took place because of many bids coming in at the last moment and the system could not cope up, he added.

When asked whether the government has asked the public sector institutions to bail out the issue, Pradhan said: "We have not asked any one (to bail out)... ONGC shares are undervalued as compared to the peer group."

Sources said that various rounds of meetings took place amongst the government officials, stock exchange executives and Sebi personnel after the closure of auction.

A poor show by ONGC share sale, through a one-day auction, as was evident from the earlier exchange data, could have also reflected badly on the government's overall disinvestment programme. The government had targetted to raise

Rs 40,000 crore through disinvestment in the current fiscal, had been able to raise just over Rs 1,100 crore prior to the ONGC issue.

The Five per cent government share sale in ONGC was intended to restart the stalled disinvestment programme to narrow a budget deficit that is already exceeded its target.

A number of big foreign institutional investors seemed to have dumped the issue after a ministerial panel on Tuesday set the floor price for the auction at Rs 290, which was termed as a very high price by many investors.

After the sale of 42.77 crore shares, the government holding in ONGC would decline from 74.14 per cent to 69.14 per cent.

Sources said that most of the bids could have come from domestic institutions and state-run LIC could have pitched in strongly for the share sale in the country's most valued public sector company.

No single buyer, other than mutual funds and insurance companies, would be allocated more than 25 per cent of the size of the offer.

The shares would be allocated on 'price-priority' basis, meaning the bidders at highest price would be allotted shares.

The bids were mostly in the price range of Rs 290-293 per share for the auction, which commenced at 0915 hours and closed at 1530 hours.

After an initial spike of about one per cent, ONGC shares had also turned weak and even slipped below Rs 290 level by afternoon trade. The stock finally closed 1.87 per cent down at Rs 287.85 at BSE.

Analysts said that a poor response earlier in the day to the bidding could be attributed to the fact that ONGC shares were trading very close to the offer price in the secondary market and even slipped below the floor price by afternoon trade.

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 had the right to either conclude the sale to the extent of subscription or cancel the sale.

The sale of shares took 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.