Equities Climb On Fi Purchases

Indian Oil Corporation (IOC), the Fortune 500 oil refining and marketing public sector unit, has decided to postpone its global depository receipt (GDR) issue by over a month. The GDR issue is now slated to hit the market by early March 2000 instead of January end as earlier scheduled. IOC officials told Business Standard that the corporation has decided to delay the pricing of the GDR issue by a month as Petro China, the oil and gas major of China, is also entering the international market at the same time with its American depositary receipts (ADRs).

"Both the Asian oil and gas majors should not hit the market at the same time and so we will go in for the GDR issue only after Petro China is through with its ADR float," the official added.

Petro China is expected to do its pre-marketing run in the third week of January which will be followed by pricing in the second week of January.

Considering the schedule of Petro China, the date of actual pricing of IOC's GDR will commence only by the end of February 2000. IOC is planning a simultaneous book-building exercise in the Indian and GDR markets.

SBI Caps, ICICI Securities, JM Financial, and Enam Financial Consultants are the advisors on the Indian side, whilst Goldman Sachs and Credit Suisse First Boston (CSFC) are the international investment bankers to the issue. Following the GDR issue, the government's stake in IOC will come down from the current level of 91 per cent to 82 per cent.

IOC is also planning an initial public offering to increase its equity base. The exact amount by which IOC's equity is likely to be expanded has not yet been finalised.

The proceeds of the proposed disvinvestment of equity of IOC will go to the government. However, that of the public issue will be used for the corporation's various projects, including modernisation and expansion plans. IOC, currently, has Rs 10,000-crore worth of projects under implementation. For the ninth and tenth Five-Year Plan periods, IOC has decided to invest about Rs 60,000 crore.

It plans to invest in expansion and diversification into downstream areas such as petrochemicals and power.