IndianOil, Bharat Petroleum & HPCL to pick up 10% in OIL
New Delhi   03-Jan-2008
Public sector oil companies Indian Oil, Bharat Petroleum and Hindustan Petroleum will pick up a 10% stake in oil exploration company Oil India Limited (OIL) at the same price as retail investors subscribing to the company's IPO. The shares will be locked in for one year, in accordance with SEBI guidelines for pre-IPO placement. IndianOil will buy a 5%, while the two other Mumbai based oil majors will take up 2.5% each. Subject to SEBI approval, OIL is planning to hit the market with its IPO in the second fortnight of February, the company's chairman MR Pasrija said. The price will be decided through a book building process. IndianOil already has a cross holding of about 7% in India's largest oil producer ONGC. IndianOil and OIL already have a tie-up to jointly prospect for oil and gas overseas. Oil India is currently almost completely government owned. During the issue, the government will disinvest 10% of its stake and the company will also simultaneously float 11% of its shareholding. In the IPO, about 6% will be" qualified institutional placements, 1% HNIs and the rest will be open for retail investors. About 1 % of the shares have been reserved for the employees. The government stake will come down to 78% after the issue. A large chunk of the IPO proceeds are planned to be used for Oil’s exploration activities. The company needs about Rs 4,500 crore to fund its capex plans. It now has 15 producing fields in Assam and Arunachal Pradesh and about three in Rajas than. Over the past few years, it has won onshore and offshore blocks in various basins including one in the Krishna Godavari basin, in which it is the operator with a 40% interest. It is also prospecting for oil in six countries largely in Africa and the Middle East. Speaking to ET, the OIL director finance, Mr TK Ananth Kumar said, the company is now virtually debt free and will fund its capex largely through the IPO and internal accruals.' After almost half a century of being an oil exploration and production company, OIL is trying to balance its portfolio the downstream oil business. It now has a 26% stake in Numaligarh Refineries and a 10% stake in Brahmaputra Cracker and Polymer, the petrochemical plant promoted by Gail India. It; is also planning a joint venture with HPCL, the LN Mittal group and Gail for an export oriented refinery and petrochemical complex at Vlzaa.