ONGC share sale falls short of target amid price fears

Document Sample
ONGC share sale falls short of target amid price fears Powered By Docstoc
					ONGC share sale falls short of target amid price fears




                                                   The ONGC share sale was expected to be a big draw
for investors amid a growing demand for oil in India

Continue reading the main story

Related Stories

       Indian oil firm ONGC 'attractive'

       India's ONGC takes over BG fields

The Indian government's attempt to sell a 5% stake in the Oil and Natural Gas Corporation (ONGC) fell
slightly short of expectations amid concerns that shares were over-priced.

It had offered 428 million shares at a price of 290 rupees each, hoping to raise 124bn rupees ($2.5bn;
£1.6bn).

It received offers for 98% of the shares on sale.

Analysts said the government may have to reconsider how and when it offloads its stakes in major firms
in future.

"It will be a huge disappointment for the government that the issue was not fully covered, and this will
lead to a lot of rethinking on the privatisation drive in the near-term," said Juergen Maiar, a fund
manager with Raiffeisen Euroasien Aktien.

Price concern

Continue reading the main story

“Start Quote

This should be one of the lessons... not to try and price the offering at a premium, especially when a
reference point is available in the market price”

Ambareesh Baliga Way2Wealth Securities
ONGC is India's largest oil producer and has been expanding its operations. It has increased its fields by a
count of 15 in the current financial year.

Its business is expected to grow further as demand for oil in India continues to rise as its economy
expands.

These factors had raised expectations that the share sale would generate a lot of investor interest.

Analysts said that although the company was an attractive investment, the pricing of its shares had kept
many potential buyers at bay.

The offer price of 290 rupees was 2.3% higher than ONGC's closing price on 28 February.

"I think greed played out here. This should be one of the lessons... not to try and price the offering at a
premium, especially when a reference point is available in the market price," said Ambareesh Baliga,
chief operating officer of Way2Wealth Securities.

				
DOCUMENT INFO
Categories:
Tags:
Stats:
views:2
posted:3/2/2012
language:
pages:2
About my name is mohamed and i'm looking forward to working in this site and publish a lot of documents and important world news