Oil India IPO in 1st week of September

Oil India Ltd is likely to launch an initial public offering in the first week of September.

"We are going ahead with the IPO. Roadshows will be held in August and the offering will open for public subscription in the first week of September," a company official said.

OIL, which produces 3.5 million tonnes a year of oil, will offer 2.64 crore equity shares to public in the IPO, while the government will simultaneously sell 10 per cent of its stake in the company to state refiners.

He, however, added that the final timing of the IPO would depend on market conditions. "As of now it is slated for first week of September."

An 11 per cent fresh equity would be sold in the IPO while the government would divest 10 per cent of its stake at the IPO price.

Post-IPO and disinvestment, the government's stake in the company will decrease from 98.13 per cent to 78.5 per cent.

The official said the IPO proceeds would be used to fund capex requirement for 2009-10 and 2010-11 when it had planned Rs 2,300 crore (Rs 23 billion) and Rs 2,400 crore (Rs 24 billion) expenditure respectively.

OIL has started discussions with bankers, including HSBC Securities & Capital Markets, JM Financial Ltd, Citigroup Global Market India and Morgan Stanley India for timing of the IPO, the official said.

OIL was to launch its IPO of 11 per cent equity shares on November 10, 2008, but the reversal of fortunes on the stock markets led to the deferment of the plan.

Alongside the IPO, government is to sell 10 per cent of its current holdings in OIL to Indian Oil Corp, Hindustan Petroleum and Bharat Petroleum. IOC will get 5 per cent while HPCL and BPCL would take 2.5 per cent shares each.

Post-IPO and equity transfer, government shareholding in the company will come down to 78.43 per cent. IOC will hold 4.45 per cent equity stake in the expanded equity base while HPCL and BPCL would hold 2.23 per cent each. Public holding would be 12.66 per cent.

OIL had received all approvals for the IPO from market regulator Securities and Exchange Board of India. "The approvals are valid till September 10," the official said.