ONGC board set to file prospectus for follow-on issue

The board of Oil and Natural Gas Corporation (ONGC) is all set to file a red herring prospectus (RHP) for a proposed Rs 11,500-crore public issue.

The government is selling five per cent, or 427.77 million shares, through a follow-on public offer. The full board of ONGC yesterday approved the RHP. “The FPO will hit the market in three weeks from the filing of RHP,” said a senior company executive.

Bank of America Corp, Nomura Holdings, HSBC Holdings Plc, JM Financial Services, Citigroup Inc and Morgan Stanley are managing the FPO.

The Department of Disinvestment earlier this month appointed three independent directors, including former RBI deputy governor Usha Thorat on the ONGC board.

The other independent directors appointed to the board include former vice-chancellor of Delhi University, Deepak Nayyar, and former secretary (financial services) Arun Ramanathan.

After the public issue, the government stake in ONGC would come down to 69.14 per cent from the existing 74.14 per cent. The company’s scrip dropped 2.13 per cent to close at Rs 278.45 a share on the Bombay Stock Exchange today.

The ONGC disinvestment was earlier planned for 2010-11 but was deferred to April 5, as the company did not have the adequate number of independent directors on its board.

The FPO was then planned to be launched on July 5, but was deferred due to the same reason. ONGC has five functional directors and two government directors.