(ET)
The board of ONGC Videsh will likely consider a proposal to float its shares at its next meeting in November following a nudge from the government to do so, people familiar with the matter said. The government has been pushing ONGC Videsh, the fully-owned unit of the state-run Oil and Natural Gas Corp, to go public as it believes it would help raise resources for further investment, reduce leverage, and boost transparency. ONGC executives have resisted listing, citing wrong timing, and have argued that a rush job will end up undervaluing the company.
The government is probably eyeing proceeds from the potential ONGC Videsh share sale to partly meet its divestment target, people familiar with the matter said. Since the government doesn’t directly own ONGC Videsh, it can ask ONGC to transfer share sale proceeds as special dividend.
The board of ONGC Videsh will take a call on the proposal, which is likely to face opposition by executive members, according to people with knowledge of the matter. The board of parent ONGC had rejected the listing proposal last December. Some of the company’s key projects such as the one in Mozambique are years away from going on stream while projects in Venezuela and Iran are facing their own uncertainties, executives said, arguing that the market will not offer the right valuation in such a scenario.
