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ONGC may sell IOC stake to LIC in block deal

ONGC has already secured shareholder nod to raise up to Rs 25,000 crore debt

Press Trust of India  |  New Delhi 

Funding may be a mix of borrowing and stake sale
Funding may be a mix of borrowing and stake sale

State-owned is likely to sell some of its stake in to institutional investors like LIC to part-fund its over Rs 34,000-crore of refiner Hindustan Petroleum Corporation Limited (HPCL).

and Natural Gas Corporation (ONGC) holds 13.77 per cent stake in India's biggest refiner Indian Corporation (IOC), which at today's market price is worth over Rs 27,800 crore. It has another 4.87 per cent stake in Ltd worth of Rs 1,600 crore.


"The of 51.11 per cent stake in will be funded through a combination of market borrowing and selling some stake in and GAIL," a source privy to the development said.

Selling stake in the open market may create volatility and so, is considering selling less than 2 per cent stake in to institutional investors like LIC in block deal, he added.

has already secured shareholder nod to raise up to Rs 25,000 crore debt, he said, adding that the company had about Rs 10,000 crore of cash in hand.

"It will be a combination of stake sale and borrowing to fund the acquisition," the source said.

The deal, he said, is likely to conclude by December. The Cabinet Committee on Economic Affairs (CCEA) had on July 19 granted 'in-principle' approval to the strategic sale of the government's existing 51.11 per cent stake in to "along with the transfer of management control, which will result in becoming a subsidiary company of ONGC".

But since the offer meant a transfer of management control from the to ONGC, there was apprehension that it would trigger Sebi's takeover code and compel to make an open offer to acquire an additional 26 per cent stake from minority shareholders, he said.

So, the terms of sale have been amended to state that "will continue to be a company in terms of section 2(45) of the Act, 2013, and will continue to be controlled by the of through under the administrative control of the Ministry of Petroleum and Natural Gas".

This helped avoid making an open offer.

First Published: Mon, October 09 2017. 17:21 IST
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