ONGC Auction Offer Fails To Fuel Govt. Disinvestment Program

DSIJ Intelligence / 01 Mar 2012

The government’s 5 per cent offer for sale in ONGC via the auction route seems to have failed massively.
The government’s 5 per cent offer for sale in ONGC via the auction route seems to have failed massively. After flagging the start of the bidding session on a rather weak note with just 38000 bids in the first hour, the offer for sale of 42.77 crore shares finally received bids for only 1.43 crore (NSE+BSE) shares by 1520 hours. This translates into merely 3 per cent of the auction offer being subscribed.

At the floor price of Rs 290 per share it would mean that the govt. would hardly garner Rs 415 crore from the offer as against the envisaged Rs 12000 crore. With the fiscal year ending and the Union Budget dates coming close, this was the final jolt that that the govt. could have got.

While it was expected that the auction offer may fail to attract much fancy from the retail investors given the premium attached to its share price, the lack of much institutional participation has come as a great shock. The dismal response from investors can also be gauged from the performance of ONCG shares on the bourses. After an initial spike of about one per cent, ONGC shares 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 the BSE.

However, the final figures are yet to be updated on the exchange websites. There is still hope lurking on the streets that the offer might have witnessed momentum buying in the final minutes of trade.

Going forward, the success of this offer is very vital for the govt. as it could possibly pave the way for various other disinvestment candidates like Oil India, IOC, SAIL and BHEL etc. But the initial looks suggest that this newly launched auction method of offer for sale in PSUs would have to take a back seat as the ONGC offer won’t meet its expectations. 

Bid Details

Quantity

BSE + NSE

1,43,85,097

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