After the 15 per cent divestment in favour of institutional investors, the Government will bring down its stake in IOC to 67 per cent. The simultaneous float of Government stock at home and overseas promises to be among the largest offering of PSU stock in recent times as the officials are convinced of the need for a 15 per cent offer. The issue is slated to hit the road in the last quarter of this fiscal. There does not seem to be any talk of a retail issue for Indian Oil at this juncture.

Still smouldering from the flak received on the Gas Authority of India Ltd's (GAIL) global depository receipts pricing, the Centre has opted for joint book-building. The system would involve offering Indian Oil shares simultaneously to institutional investors within the country and overseas, and so, a common price.

The GAIL issue fetched Rs 60 a share from domestic financial institutions in February and Rs 70 a share from overseas institutional investors last month. Even so, finance minister Yashwant Sinha found himself defending the GDR price, which was at a discount to the prevailing market price of Rs 79 per share.

The Indian Oil stock closed at Rs 290.05 on the BSE on Monday, which is lower than the post-bonus issue price of around Rs 352. The 1:1 bonus issue doubled the quantum of Government shares available for disinvestment.The company's paid-up share capital jumped to Rs 778.63 crore after the bonus issue from Rs 389.34 crore. The Centre owns 82 per cent of the expanded equity, or Rs 638.47 crore worth of shares.

After the cross-holding of Government equity among oil public sector undertakings, the Oil and Natural Gas Corporation has acquired roughly 9 per cent IOC stock. IOC employees own 5 per cent while banks and financial institutions hold roughly 4 per cent.

The divestment in GAIL will be a combination of a private placement of 3.5 per cent Government shares in February, a GDR in November and a retail issue somewhere in the first quarter of 2000-2001. Market experts feel that domestic equity float, whether a retail issue or private placement, is not likely to live up to expectations now, and GDRs would a safer bet.