Business Standard

New sale, old tale

Related News

Government-led oil major Oil and Natural Gas Corporation () on Thursday, sold 427.77 million shares through an offer for sale method. To find out all about this new method of disinvestment, read on.

What is an offer for sale through auction?
It is the latest method introduced by the market regulator to enable large companies raise money through .

Who can raise money through this route?
Only the top 100 companies in terms of are allowed to raise money through this route.

How long will the auction be open?
The auction is open during the trading hours of the market and has to be completed within a day.

How is the allocation price determined?
The seller should inform the floor price. Floor price is the minimum price at which the seller intends to sell the shares. The seller has the option to announce the floor price to the market or submit the floor price to the stock exchange in a sealed envelope. Where the floor price is submitted to the stock exchange in a sealed envelope, it shall be declared to the market after closure of the offer. ONGC has announced a floor price of Rs 290 per share

How is the allocation done?
Allocation can be done either on price priority basis or on proportionate basis. ONGC auction was conducted on price-priority basis, wherein the highest bidder gets maximum allotment. In the price-priority method, the exchanges will show multiple clearing prices and the number of shares allotted at each of these clearing prices.

Who can bid?
All kinds of shareholders are eligible to bid for an offer for sale through auction.

Is there any cap on allotment?
No single bidder can be allotted more than 25 per cent of the shares on offer. However, insurance companies and are exempted from this rule. This has probably helped the ONGC offer sail through with investments from .

What are the advantages of this route?
Large institutional investors who want to buy a significant chunk of a stock can use this route to buy shares without disturbing the share prices. Companies also can raise money quickly without going through the lengthy procedure required in the case of a public offer.

What happens if the issue is undersubscribed?
The seller has the option to retain the subscribed portion or cancel the sale.

Read more on:   
|
|
|
|

Read More

Flexible gains

ICICI Prudential Dynamic Plan is a flexi-cap opportunity fund launched in November 2002. The fund has been ranked in the top 30 percentile, that is, ...

Quick Links

 

Market News

Markets closed on account of election day in Mumbai

Markets will remain closed today on account of voting for the general elections in Mumbai constituencies

Plea against MF body as self-regulator admitted

The Securities Appellate Tribunal (SAT) has admitted an appeal against a decision on approval given for setting up a regulatory organisation for ...

El Niño worries inflation managers

RBI has decided to consider inflation based on new series CPI in which half of the weight is for food, beverages and tobacco

Coffee at 26-month high as Brazil drought raises price volatility

Coffee futures jumped as much as 8.3 per cent, driving volatility to the highest since 2000

JSW Steel mulls using Goan ore for Dolvi plant

The company plans to participate in e-auctions at Goa as and when the ore with 58% Fe is auctioned

Back to Top