Sebi gives green signal for PN investment in ONGC

This means foreign investors who are not registered with the Sebi can buy ONGC shares by subscribing to the PNs (which denote the underlying ONGC shares).

“The big size of the issue might have prompted the government to tap all funding sources,” merchant bankers in Mumbai said. In view of the importance being attached to the success of the ONGC issue for attainment of the revised disinvestment target of Rs 14,500 crore for the year 2003-04, the government had recommended to Sebi for favourable consideration, sources said.

Sebi had so far permitted fund managers to use participatory notes but barred the lead managers and book runners from using the instrument by which foreign funds not registered in India could participate in a public offer.

But some market experts feel that foreign investors could misuse the PN route. “Any Tom, Dick and Harry will put their money… who knows, there could be even money laundering,” said a source.

A sizeable chunk of FII investment in the stock market is through the PN route. Sebi has already admitted that 20-25 per cent of the net FII investment in the stock market is through the PN route. This means the identity of investors who put this money is not known in India.

Meanwhile, Disinvestment Secretary Dhirendra Singh and Finance Secretary D C Gupta will join the ongoing roadshows for ONGC public offer and hold meetings with investors in London, New York and Boston beginning March 8 in a bid to hardsell the issue. The issue for 14 crore shares would hit the market on March 5 for which the government would fix the price band on Wednesday.

The Government is targeting about Rs 10,000 crore from sale of ten per cent equity in ONGC, which closed the last trading session on the BSE at Rs 760 a share.

Disinvestment ministry officials clarified that only one per cent of the ONGC stock was being traded presently and therefore, it would not be proper to link the floor price for the issue to the current market price.

IPCL and CMC issues, which closed recently, shored up government finances by close to Rs 1400 crore while GAIL and IBP have also recorded oversubscriptions.