OIL may file IPO papers with Sebi this month

Oil India (OIL) may submit this month the draft red-herring prospectus (DRHP) to SEBI for its proposed Rs 1,400 crore IPO. The company is expecting the issue to open in February if approved by the capital market regulator. OIL had earlier planned to submit the DRHP by mid-November.

According to industry sources, the public sector integrated oil company is now in the final stages of preparing the DRHP.

Independent directors

The process of appointing seven independent directors to conform with Clause 49 of the listing agreement is also on and is expected to be over before the issue hits the market. The search committee under the Public Enterprises Selection Board (PESB) began the process of selecting the suitable candidates in October.

As approved by the Cabinet Committee of Economic Affairs, OIL would propose fresh issue of 10 per cent of the company’s paid-up capital through the IPO.

This apart, the company would also issue an additional one per cent capital to the employees. HSBC, Morgan Stanley and Citibank have been appointed as lead managers to the proposed IPO.

Divestment proposals

The DRHP will also mention proposed disinvestment of 10 per cent of OIL’s paid-up capital by the Government in favour of three downstream PSU oil companies, namely, Indian Oil, Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL).

The disinvestment will take place at the share price to be discovered through the IPO.

Post-disinvestment, IOC will pick up five per cent stake in OIL. BPCL and HPCL will get 2.5 per cent stake each.

The issue proceeds are slated to be used in the OIL’s upstream ventures in India and abroad,