Oil & Natural Gas Corp, India's biggest oil producer, received orders for more than six times the amount of stock offered in a government share sale that may raise as much as US$2.4 billion.
Investors ordered 860.1 million shares, against the 142.6 million available, the Mumbai stock exchange's Web site showed.
The final price will be announced today.
The sale of a 10 percent stake in Oil & Natural Gas, the nation's biggest stock offer, gives investors a chance to buy into a company that supplies a third of the 105 million tonnes of oil a year used by India's billion people. Overseas investors accounted for about 90 percent of the bids received on the National Stock Exchange.
"The fact that India's oil and energy sector is globally signifi-cant, has certainly registered with overseas investors," said Vijayan Krishnamurthy, chief executive offer at JM Mutual Fund, which has the equivalent of US$1 billion in assets and owns 28,000 Oil & Natural Gas shares.
"ONGC is flickering brightly on their radar screens. That wasn't the case even a year ago," he said.
The sale marks the final stage of a month-long disposal of government stakes in six companies that will raise US$3.2 billion by the March 31 fiscal year-end.
India received bids in excess of the shares it's selling in companies including gas distributor GAIL (India) Ltd and Dredging Corp of India.
The sales will help narrow the government's budget deficit a month before elections and may pave the way for further asset sales. India needs money to help fund spending on roads, schools and other projects as the nation's economy expands at its fastest rate in 15 years.
The government is tapping demand that drove the benchmark Sensex share index up 73 percent last year as international investors poured a record US$7.6 billion into Indian stocks.
"The timing has been good. The government sold good assets at a time when the markets are doing well," said Rajiv Jain, managing director at New York-based Vontobel Asset Management Inc, which has US$100 million in Indian stocks and owns 356,000 Oil & Natural Gas shares.
"I'm not the least bit surprised that the sale was successful," he said.
JM Morgan Stanley, DSP Merrill Lynch and Kotak Mahindra Capital Co managed the sale.
Overseas investors accounted for 649.2 million of the 719.58 million shares bid for on the National Stock Exchange on Friday, the latest day for which information on investor categories was available.
Indian mutual funds bid for 28.12 million, insurance companies ordered 5.91 million and financial institutions bid for 13.77 million. Individual investors ordered 10 million shares out of the 35.6 million set aside for them.
Though the company's shares have tripled in the past two years, many investors avoided the stock because of its limited availability.
The government's sale of a 10 percent stake will increase the free float to 14 percent and raise Oil & Natural Gas's profile with international investors.
"The stock will be bought by index funds as its weighting in global indices will rise," John Burbank, who manages US$500 million at Passport Capital in San Francisco, including 600,000 Oil & Natural Gas shares, said before the sale.
Oil & Natural Gas plans to spend US$2.2 billion a year through 2007 exploring in India -- where it owns rights to explore 51 of the 91 sites the government has sold the past three years -- Africa, Russia, Libya and Vietnam.
Oil & Natural Gas is boosting investment to meet India's rising energy demand, which it expects will grow at more than 4 percent annually for the next 25 years.
Part of that money will come from internal cash resources. The company had cash or cash equivalent of US$2.2 billion as of Dec. 31 and was almost debt-free.
The successful sale of a government stake may prompt the company to sell more shares in future.
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