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India's $2.5 billion auction of government shares in Oil and Natural Gas Corp ended in chaos, with TV channels saying it had generated bids for just two-thirds of the shares on offer, but both of the country's main stock exchanges saying they were still counting orders.
"I'm in a crisis meeting. I can't talk," Sidhartha Pradhan, additional secretary in the government's Department of Disinvestment, told reporters outside his office in New Delhi before shutting the door.
One channel said state-owned Life Insurance Corp of India (LIC) had stepped in to buy up the remainder of the shares, but another channel said this was not the case. The National Stock Exchange and the Bombay Stock Exchange said they were still counting bids that had been entered.
The floor price for the auction had been set at 290 rupees, a 2.3 percent premium to Tuesday's closing price - prompting criticism that it should have been priced at a discount in order to ensure success.
"I think greed played out here. This should be one of the lessons, not to try and price the offering at a premium, especially when a reference point is available in the market price," said Ambareesh Baliga, chief operating officer at Mumbai's Way2Wealth Securities.
The ONGC sale was intended to restart India's stalled programme to sell down stakes in state companies in order to trim its widening fiscal deficit. Market commentators were quick to slam the government's handling of the long-delayed ONGC sale, which was conducted via auction on the stock exchanges in a test case for a newly approved method.
"The ONGC issue should have been priced at a discount and planned out well, which would have created a positive sentiment for future disinvestments," said Sunil Jain, vice president of equity research at Nirmal Bang.
STILL COUNTING ...
More than two-and-a-half hours after the auction closed, official data was not available on how many shares had been bid for, but TV channels reported bids had been received for about 290 million of the 427.77 million shares on offer.
A company official said he could not immediately comment, while LIC officials were not available for comment. Shares in ONGC, the country's largest oil and gas producer and second-most valuable listed firm, ended the day down 1.7 percent at 288.2 rupees.
The government had earlier planned to sell ONGC shares through a public offer, but that was scrapped last October after a tepid response from investors amid weak equity markets. If fully subscribed, the offer would rank among India's five biggest equity offerings.
Citigroup, Bank of America Merrill Lynch, HSBC, Morgan Stanley, Nomura and India's JM Financial were the banks on the ONGC deal.
New Delhi is on track to fall far short of its target of trimming its fiscal deficit to 4.6 percent of GDP in the fiscal year that ends this month. The government had hoped to raise $8.1 billion in the current fiscal year but had managed just $250 million before the ONGC deal.
India's stalled divestment programme also calls for reduced holdings in other state-run firms such as Bharat Heavy Electricals and Steel Authority of India.
India's stock market posted its first annual fall in three years in 2011, losing nearly 25 percent. Shares in ONGC fell 20 percent in the same period.
