ONGC stake sale: Govt seeks bids from investment banks

New Delhi: The government is seeking bids from banks to help sell a stake valued at Rs17,800 crore ($3 billion) in Oil & Natural Gas Corp., the nation’s biggest energy explorer.

The government has asked banks to submit documents by 6 August, according to a notice on the disinvestment department’s website. The firms are required to quote the fee they will charge to manage the sale. As many as five banks will be hired, the department said.

The first asset sale by Prime Minister Narendra Modi’s government, which swept in to office in May with the highest election victory margin in 30 years, is part of a plan to narrow the nation’s budget deficit to the lowest in seven years. Govt owns 69% of ONGC, the nation’s second-largest company by market value.

To fund the budget shortfall, finance minister Arun Jaitley plans to raise Rs63,400 crore from selling government stakes in companies. He projected the government’s total revenue will rise to Rs11.9 trillion in the current year, up from the previous government’s Rs11.7 trillion estimate.

ONGC’s shares have gained 44% this year compared with a 39% increase in the S&P BSE India Public Sector Undertakings Index and the 21% rise in the benchmark S&P BSE Sensex. The shares added 0.8% to Rs416.1 in Mumbai on Wednesday.

The government plans to sell 428 million ONGC shares, valued at Rs17,800 crore at Wednesday’s closing price. The government has prepared cabinet notes for approval regarding 10% stake sales in Container Corp. of India and NHPC Ltd., and a note is ready on divesting stake in Coal India, government officials said 25 June. Other sales are planned in Hindustan Zinc Ltd. and Bharat Aluminium Co. The government will also sell a 5% stake in Rural Electrification Corp and may list Hindustan Aeronautics Ltd.