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Petronet IPO at Rs 13 a share

February 13, 2004 19:38 IST

The initial public offering of India's first liquefied natural gas importer Petronet LNG Ltd may be postponed by a week as differences between promoters and merchant bankers delayed fixation of price band for the issue of 261 million equity shares.

The IPO, which was scheduled to hit markets on February 19, may now come on February 26, government sources said.

PLL board met in New Delhi on Friday to discuss the price band to be offered for bidding under the book building route after it was in disagreement with the band of Rs 10 to 12 a share suggested by two of the merchant bankers.

While the PLL wanted the price band of Rs 16 to 18 a share based on the feedback it got from SBI Mutual Fund and LIC Mutual Fund that they would pick 10 per cent of the offering at a maximum of Rs 20 a share, the board decided to fix a floor (minimum) price for the proposed IPO at Rs 13 a share incorporating the concerns of bankers who had opined that the issue may not be fully subscribed considering that six mega public offers of blue chip companies are on the anvil in February and March.

The board, whose chairman is Petroleum Secretary B K Chaturvedi, would fix the ceiling price (maximum) price in consultation with the merchant bankers, sources said, adding that the further round of consultations may delay the IPO.

DSP Merrill Lynch and JM Morgan Stanley, two of the five book runners appointed for the public issue, had expressed serious reservation at retail investors, for whom 90 per cent of the offer size has been reserves, subscribing their quota as they may be keeping their limited funds for public issues of ONGC, GAIL, IBP, IPCL or CMC.

Sources said the differences reached such a flash point that PLL top brass decided to take the issue of IPO pricing to its board, which is the ultimate authority to decide on the issue.

Besides Chaturvedi, the board comprises PLL CEO Suresh Mathur and its director (finance) P Dasgupta and representatives of four promoters companies - Oil and Natural Gas Corp, GAIL India Ltd, Bharat Petroleum Corp Ltd and Indian Oil Corp.

The company has appointed SBI Caps, DSP Merrill Lynch, JM Morgan Stanley, ICICI Securities and Enam Financial as the merchant bankers for the public issue of 261 million shares, representing 34.8 per cent of the equity.

PLL, which received at Dahej in Gujarat the country's maiden LNG parcel from Qatar on January 30, will launch roadshows for the IPO next week after announcing a price band for the issue's book building process.

Roadshows will be held at Mumbai, Delhi, Chennai, Kolkata, Bangalore, Hyderabad and Ahmedabad besides a few other important financial centres.

Petronet is looking to raise at least Rs 261 crore (Rs 2.61 billion) from the issue, which works out to 34.8 per cent of the company's post-issue equity capital of Rs 750 crore (Rs 7.50 billion).

Shares of the company are going to be listed on the  Bombay and National Stock Exchange.

The four promoters hold 12.5 per cent stake each in PLL, while project consultant Gaz de France has 10 per cent. Asian Development Bank has taken the remaining 5.2 per cent stake.
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