Sign in Subscribe
Banking industry

ONGC Follow-on Public Offer: Merchant Banks to Make Nominal Fees

Strategic Insights

— 1 min read

The Indian government is set to sell a 5% stake in Oil and Natural Gas Corporation (ONGC) Ltd, valued at around Rs 12,500 to Rs 13,000 crore, through a follow-on public offer (FPO) in March. Six merchant banks, including Bank of America Corp, Nomura Holdings, HSBC Holdings Plc, JM Financial Services, Citigroup Inc, and Morgan Stanley, have been selected as book running lead managers for the issue. Notably, these banks will only be paid a nominal fee of Rs 6, despite managing the Rs 13,000 crore issue, as they all bid the minimum fee of Re 1 and were judged on their technical qualifications.

Key Takeaways:

  • The Indian government plans to sell a 5% stake in ONGC Ltd, valued at around Rs 12,500 to Rs 13,000 crore, through a follow-on public offer (FPO) in March.
  • Six merchant banks, including Bank of America Corp, Nomura Holdings, HSBC Holdings Plc, JM Financial Services, Citigroup Inc, and Morgan Stanley, have been selected as book running lead managers for the issue.
  • All six selected banks quoted the lowest permissible bid of Re 1, making it a nominal fee of Rs 6 for managing the Rs 13,000 crore issue.
  • The book running lead managers will be judged on their technical qualifications, as their financial bids were the same.
  • The Centre plans to sell 5% of its shareholding in ONGC in March, with the red herring prospectus to be filed around mid-February.
  • Five more independent directors will be appointed to the ONGC board to meet Sebi's listing requirement.
  • The BRLM will foot the bill for printing application forms, filing fees to Sebi, software charges to the stock exchanges, and payments to depositories.

Statistics:

  • Rs 12,500 to Rs 13,000 crore: Valuation of 5% stake in ONGC Ltd to be sold through FPO.
  • 5%: Stake in ONGC Ltd to be sold by the Indian government.
  • Rs 6: Nominal fee paid to the six merchant banks for managing the Rs 13,000 crore issue.
  • Re 1: Minimum fee quoted by the six selected merchant banks.
  • 6: Number of merchant banks selected as book running lead managers for the issue.
  • March: Date by which the Centre plans to sell 5% of its shareholding in ONGC.

Sources:

  • The Indian Express Online Media, Copyright 2011
  • Contify.com

Read more