IOC divestment may be deferred to next fiscal

Government cancels IMG meet to select merchant bankers

The government may defer the disinvestment of Indian Oil Corporation (IOC) to the next financial year (2015-16) following the poor response to the Coal India stake sale last week which was substantially bailed out by state-run LIC.

The government intends to sell 10 per cent stake in IOCL through an OFS (offer for sale) and had invited bids for the appointment of merchant bankers.

However, a notice posted on the website of the Department of Disinvestment on (DoD) Thursday said the meeting of the Inter-Ministerial Group (IMG) for selection of merchant bankers and legal advisors for IOC “stands postponed”.

Qualified interested bidders were scheduled to make a presentation of their credentials before the IMG, which is chaired by the Disinvestment Secretary, on Friday (February 6).
The bankers for managing PSU (public sector undertaking) stake sales are chosen based on their past performance in public offerings as well as domain expertise, experience, and understanding of the company.

The DoD has already circulated a draft note for the consideration of the cabinet committee on economic affairs (CCEA) for sale of 10 per cent out of the government’s 68.57 per cent stake in IOC.

At the current market price of Rs 334.75 apiece, selling of 24.27 crore IOC shares could fetch the exchequer over Rs 8,000 crore.

Last week’s Coal India disinvestment, which raised Rs 22,557 crore, which is about half the budgeted amount, was substantially bailed out by LIC. The life insurer bought shares to the tune of Rs 10,000 crore, enabling the government to claim the issue was oversubscribed.