Oil India may hit capital markets in Sep

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New Delhi: Oil India Ltd, the nation's second-largest state-run explorer, is likely to launch an initial public offering (IPO) by September this year, company Chairman N M Borah said on Tuesday.

The company has initiated discussions with its IPO adviser's to decide on the timing. "Stock markets are reviving and so we have started dialogues again with advisers for the IPO," he told reporters in New Delhi.

The timing, however, would be decided in consultation with the government and after the approval of the company's board.

"We have tentatively informed the board about a roadmap according to which the IPO should be there by September. But this is subject to market conditions," he said.

An 11 per cent fresh equity would be sold in the IPO while the government would divest 10 per cent of its stake at the IPO price.

Post-IPO and disinvestment, the government's stake in the company will decrease from 98.13 per cent to 78.5 per cent.

Borah said the IPO proceeds would be used to fund capex requirement for 2009-10 and 2010-11.

OIL has budgeted a Rs 2,300-crore capital expenditure in 2009-10 and Rs 2,400 crore for the next year.

Petroleum Secretary RS Pandey said the IPO was decided last year and OIL was given a mandate to go ahead.

"But they (OIL) did not go ahead because of market conditions. Now markets are on correction and by September the IPO may be launched," Pandey said.