ONGC-bitten govt may go slow on auction path

The system overhang theory floated by the government late Thursday night was dismissed by the bourses,with the Bombay Stock Exchange and the National Stock Exchange issuing a joint statement late on Friday evening saying

“exchange systems operated normally and smoothly and there were no glitches”.

The 5 per cent share sale in ONGC was the first time that the government used the auction method for divesting its stake in a public sector enterprise,coming at a time when investment appetite is seen to have picked up in both the primary and secondary markets. State-owned firms including Steel Authority of India Ltd (SAIL),Oil India Ltd and Bharat Heavy Electricals Ltd (BHEL) were expected to be disinvested using the auction route later this calender year. For now,all of this seems to be on hold.

Without disclosing the list of institutional investors who bid for the issue,the finance ministry on Friday said that ONGC’s share sale garnered Rs 12,766.75 crore at an average price of Rs 303.67 per share. “The volume weighted average price was Rs 303.67 per share against a floor price of Rs 290,” an official release said.

Sources indicated that the government may not any longer use the route for future issues. “There is hardly a month left in the current fiscal. In 2012-13,the government is hopeful that stock markets would revive and it can go back to public issues for stake sales,” a source close to the development said. Besides,the option of disinvestment through the buyback route has been opened up by a cabinet decision on Thursday,the source said.