ONGC appoints 6 merchant banks to manage stake sale

State-run Oil and Natural Gas Corporation has appointed six merchant bankers — Bank of America, Citigroup, HSBC, Nomura Holdings, JM Financial Services, Citigroup Inc and Morgan Stanley — to manage the sale of government’s 5 per cent stake in the company.

“Six merchant bankers have been shortlisted for the follow-on public offer. They will be subjected to other checks and another shortlist drawn once the Finance Ministry approves it,” R S Sharma, Chairman, ONGC told reporters on the sidelines of a conference in Mumbai.

The government plans to sell 5 per cent of its shareholding in the country’s biggest energy explorer in March to garner around Rs 14,000 crore.

After the offer, the government shareholding in ONGC would come down to 69.14 per cent from the current 74.14 per cent. The ONGC offer will be the last of government issues in the current financial year and is crucial to meet the budgetary target of Rs 40,000 crore for disinvestment.

Legal advisors for the FPO would be appointed by tomorrow, Sharma said. ONGC would file the draft red herring prospectus for the FPO mid-February. The company, which currently has four independent directors, will appoint five more independent directors on its board shortly.

Besides the chairman, ONGC has six functional directors. Before the share sale, ONGC will also split equity shares with a face value of Rs 10 each into two shares of Rs 5 each. It will also issue a free share to every shareholder.

Market value of ONGC’s shares, after the share split and bonus issue, dropped to around Rs 300 per share. ONGC’s scrip was trading at Rs 1,170.20, down 0.73 per cent on the Bombay Stock Exchange.