Through ONGC OFS, the government wants to raise about Rs 3000 crore, but due to the fall of 7% lower reserve price than Tuesday’s closing price, it has lost Rs 7000 crore.
ONGC OFS: The Modi government is going to sell its 1.5 percent stake in the country’s largest government company ONGC. The government is selling a total of 9.43 crore shares under this offer, which includes an option to sell an equal number of shares in case of over-subscription. The government is going to sell this share under the Offer for Sale (OFS), through which a target of raising about Rs 3000 crore has been set.
But according to news agency PTI, the government has declared the reserve price of ONGC’s shares so low for this disinvestment that it seems to be losing instead of profit. This is happening due to the sharp fall in the price of the shares of the company. According to estimates, due to the fall in the company’s stock on Wednesday, the government has suffered a loss of about Rs 7000 crore in terms of market capitalization. That is, the amount of money the government wants to raise, it has lost more than double that in a single day!
Why is the reserve price so low?
In fact, the reserve price fixed by the government for ONGC’s offer for sale is 7 percent less than the closing price of the company’s shares on Tuesday. On Tuesday, ONGC shares closed at Rs 171.05 on the BSE. But the government has kept its reserve price in OFS at Rs 159. It is also worth keeping in mind here that even on Tuesday, the shares of the company had closed not with an increase but with a fall of about 3 percent. That is, compared with the closing price of Monday, the reserve price of the offer for sale was about 10 percent less than the market price.
One of the major reasons for the decline in ONGC’s shares on Wednesday is believed to be the fall in the reserve price. The company’s shares closed at Rs 161.80, down about five and a half percent on Wednesday. Due to this fall, the shareholders of the company have lost more than 11 thousand crore rupees in a single day in the form of market cap.
To raise 3000 crores, loss 7000 crores?
The government holds 60.41 percent of ONGC’s shares, so the government has suffered a loss of about Rs 7000 crore out of this. In such a situation, the question is bound to arise that in the disinvestment through which the government wants to raise Rs 3,000 crore, what is the sense in making its own loss of Rs 7000 crore by keeping the share price low?
Minority shareholders of ONGC have also suffered a loss of more than Rs 4000 crore in a single day due to Wednesday’s fall. Not only this, according to news agency PTI, industry sources say that the company’s employees may also have to suffer due to the fall in the market cap, because while determining their Performance Related Payment (PRP) during 2021-22. Market cap has been kept as a major base.
OFS open for institutional investors on Wednesday
However, a two-day offer for sale brought for selling 1.5 per cent shares of ONGC through OFS was opened for institutional investors only on Wednesday. Under this, it is proposed to sell 8.49 crore shares of the company to non-retail investors. Including green shoe option, this offer is of 16.98 crore shares. According to the data received from the stock exchange, institutional investors have applied to buy 30.35 crore shares, which is about three and a half times or 357.44 per cent more than the quota fixed for them. If calculated on the basis of the nominal value of Rs 159.91 per share, then this offer is about Rs 4854 crore. Describing this as very encouraging response, DIPAM Secretary Tuhin Kant Pandey said that the government has decided to use the green shoe option in this offer for sale.
OFS to open for retail investors on Thursday
The OFS of ONAGC will open for retail investors on Thursday. Under this, 94.35 lakh shares have been kept for retail investors. If you include Green Shoe Option, then this offer is for 1.88 crore shares. During the current financial year, the government has so far raised a total of Rs 12,423.67 crore under its disinvestment program through measures such as offer for sale, employee OFS, strategic disinvestment and buyback. While the target set is to raise Rs 78,000 crore.
(Input : PTI)
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