FinMin aims to launch ONGC, SAIL FPO next month

Notwithstanding the volatility in markets, the Finance Ministry is working towards launching the follow-on public offers (FPO) of ONGC and SAIL next month, said an official today.

"We are aiming to launch SAIL FPO by the end of March and working towards it. ONGC issue is expected to hit the market on March 15," a ministry official told PTI.

The official said the date to launch SAIL FPO would be announced after a week and that the issue of merchant bankers has been sorted out.

"The disinvestment department officials met SAIL merchant bankers and the issue has been resolved. The date of the FPO would be decided after a week," the official added.

The SAIL's FPO was earlier planned to hit the markets by the middle of February.

However, volatility in capital market and a controversy about its investment bankers, who were also working for the public offer of Tata Steel in January, have pushed the sale to March after the proposed FPO by oil and gas major ONGC.

Since beginning of 2011, the Bombay Stock Exchange benchmark Sensex, which closed today at 18,506.82 level, has gone down by about 10% due to a host of national and international issues like 2G Spectrum Scam and Egypt crisis.

Yesterday, Steel Secretary P K Misra had said that volatility in stock markets may further delay state-run SAIL's Rs 8,000 crore FPO due in March, to next fiscal.

"We are ready, but our expectation is that markets should be more stable. It could also get pushed to next (financial) year," Steel Secretary P K Misra had said.

The government plans to disinvest SAIL in two phases. In the first phase, the steel giant would raise Rs 4,000 crore by divesting 5% government stake as well as raise fresh equity of the same proportion.

In the second phase that is yet to announced, another 10% stake sale would be undertaken by SAIL through the FPO route.

At present, the government holds a stake of a little over 85% in SAIL. Post-FPO, its equity in the company is expected to go down to about 69%.

Aiming to raise Rs 40,000 crore through disinvestment in the current fiscal, the government has mopped up around Rs 21,000 crore by diluting its stake in six companies-Satluj Jal Vidyut Nigam, Engineers India, Coal India, Power Grid, Manganese Ore India Ltd and Shipping Corporation.

Besides SAIL, the government also plans to dilute its stake in ONGC in March this fiscal.

The Cabinet had on December 1 approved sale of the government's 5% stake in ONGC, the nation's highest profit-earning firm, to raise up to Rs 12,000-12,500 crore.

Post offer, the government shareholding in ONGC would come down to 69.14% from the current 74.14%.