(Adds details, exchange data)
* Bids for 154 mln shares vs 60 mln on offer
* Bids at weighted average price of 517.99 rupees
* Sovereign investors account for 40-50 pct of bids
By Prashant Mehra
MUMBAI, Feb 1 India raised $585 million through
a share sale in state explorer Oil India Ltd on
Friday, an encouraging sign for the government's efforts to
divest stakes in other state firms to bridge its fiscal deficit.
The government had offered 60.11 million shares, or 10
percent of the company's stock and had set a floor price of 510
rupees per share for bids. Before the offer, it held about 78
percent of the company.
By Friday's close, the Oil India offer had attracted bids
for 154.14 million shares at an indicative weighted average
price of 517.99 rupees, exchange data showed.
The bids for two-and-half times the shares on offer
indicated rising investor interest in the oil and gas sector
after the government partially freed diesel prices last month
and ahead of an impending increase in natural gas prices
, both aimed to bring down its fuel subsidy bill.
The subsidy burden on India's state oil producers and
retailers has long been a worry for investors. Last year, a $2.6
billion stock auction in state explorer Oil and Natural Gas Corp
required large bids from state investors to be fully
The Oil India offer follows a $1.1 billion share auction in
state miner NMDC in December.
Selling shares in state companies is a key element of the
government's plan to bring down its fiscal deficit to 5.3
percent of gross domestic product by March-end to avoid a credit
downgrade from global ratings agencies.
New Delhi aims to raise a total of $5.5 billion in the
current fiscal year ending March through stake sales, a target
many analysts and economists feel is optimistic.
Upcoming share sales in the current fiscal year include top
power utility NTPC Ltd, state trading firm MMTC Ltd
and steelmaker Steel Authority of India Ltd.
Foreign institutional investors accounted for about 40 to 50
percent of the total Oil India bids, two sources with direct
knowledge said. Final data on bids is expected later on Friday.
Analysts expected the offer to generate robust demand, given
Oil India's attractive valuation compared to larger rival ONGC,
and strong growth prospects for the company. Only two of the 40
analysts covering Oil India have a 'sell' recommendation on the
stock, according to Thomson Reuters Starmine data.
Oil India, which accounts for 10 percent of the country's
domestic crude output and about 5-6 percent of its natural gas,
holds assets in India's northeast. It has also been aggressively
scouting for overseas assets.
Shares in the company closed 2.7 percent lower at 525.50
rupees, but still at a premium to the indicative offer price.
The stock has jumped 13 percent so far in 2013, compared with a
2 percent gain in the main stock index.
(Additional reporting by Sumeet Chatterjee; editing by Keiron