July 17 (Bloomberg) -- India is seeking bids from banks to help sell a stake valued at 177 billion rupees ($2.9 billion) in Oil & Natural Gas Corp., the nation’s biggest energy explorer.
The government asked banks to submit documents by Aug. 6, according to a notice on the disinvestment department’s website in New Delhi yesterday. Companies 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 into office in May with the biggest election victory margin in 30 years, is part of a plan to narrow the nation’s budget deficit to the lowest in seven years. India owns 69 percent of ONGC, the nation’s second-largest company by market value.
To fund the budget shortfall, Finance Minister Arun Jaitley plans to raise 634 billion rupees from selling government stakes in companies in the fiscal year ending March 31, 2015. He projects the government’s total revenue will rise to 11.9 trillion rupees in the current year, up from the previous government’s 11.7 trillion rupee estimate.
ONGC shares have gained 43 percent this year, compared with a 41 percent increase in the S&P BSE India Public Sector Undertakings Index and the 21 percent rise in the benchmark S&P BSE Sensex. The shares fell 0.7 percent to 413.25 rupees in Mumbai trading.
The government plans to sell 428 million ONGC shares, valued at 177 billion rupees at today’s closing price.
The government has prepared cabinet notes for approval regarding 10 percent stake sales in Container Corp. of India and NHPC Ltd., and a note is ready on divesting stake in Coal India Ltd., government officials said June 25. Other sales are planned in Hindustan Zinc Ltd. and Bharat Aluminium Co. The government will also sell a 5 percent stake in Rural Electrification Corp. and may list Hindustan Aeronautics Ltd.
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