Fuelling investor’s appetite..

By Garima Manocha

State run ONGC is all geared up to make its mega FPO, which is scheduled for early next year, the most attractive deal for the retail investors. It is hugely marketing the public issue with the announcement of its share split in two-for-one ratio as well as the issue of bonus shares for the existing shareholders. If this wasn’t enough, it is also planning to dole out a special dividend, on the lines of the IPO of Engineers India ltd earlier this year. This dividend is a one-off payment to shareholders which is separate from the routine cycle of dividends. The percentage of this dividend would be decided by the Company’s board. The proposal for this dividend has already been approved by the CCEA (Cabinet Committee on Economic Affairs).

The Government, through this issue, plans to divest 5% of its stake in the company, to raise about Rs 11,000 crores. It currently owns 74.14% of the company and thus, would itself gain handsomely from the dividend, being the biggest stake holder.

Earlier, in 2004, the 10% disinvestment by the Govt. in the company was a major hit. The Govt. then mopped up Rs 10,542 core against the target of Rs 10,000 crores. If the investor sentiment as well the foreign flows continue as they are currently, this issue too is likely to be as big a hit as the Coal India IPO. Moreover, the attractive propositions made by the company would provide a huge impetus for the retail investors to take part in the FPO and thus help in its success.


Garima Manocha is a first year student at CBS, studying BFIA.