ONGC to sell IOC stake to LIC in block deal

State-owned ONGC is likely to sell some of its stake in IOC to institutional investors like LIC to partfund its over Rs 34,000-crore acquisition of refiner Hindustan Petroleum Corporation Limited (HPCL). Oil and Natural Gas Corporation (ONGC) holds 13.77 per cent stake in India's biggest refiner Indian Oil Corporation (IOC), which at Monday's market price is worth over Rs 27,800 crore. It has another 4.87 per cent stake in GAIL India Ltd worth of Rs 1,600 crore.

"The acquisition of 51.11 per cent government stake in HPCL will be funded through a combination of market borrowing and selling some stake in IOC and GAIL," a source privy to the development said. Selling stake in the open market may create volatility and so, ONGC is considering selling less than 2 per cent stake in IOC to institutional investors like LIC in block deal, he added.

ONGC has already secured shareholder nod to raise up to Rs 25,000 crore debt, he said, adding that the company had about Rs 10,000 crore of cash in hand. "It will be a combination of stake sale and borrowing to fund the acquisition," the source said. The deal, he said, is likely to conclude by December. Govt had on July 19 granted 'in-principle' approval to the strategic sale of the 51.11 per cent stake in HPCL to ONGC "along with the transfer of management control.

The acquisition of 51.11pc government stake in HPCL by ONGC, will be funded through a combination of market borrowing and selling some stake in IOC and GAIL