State-owned insurance giant LIC, which saved the much-hyped ONGC share auction, has lost around Rs 900 crore in market value of the acquired stake in the oil major in just two trading sessions after the Offer for Sale (OFS) on Thursday.
LIC, according to official sources, picked up 40 crore shares, or 95 per cent of the state-owned ONGC shares on offer, sold through the auction route and witnessed substantial erosion in value of its investments thereafter.
Taking into account the average price of Rs 303.67 per share, the acquisition of 40 crore shares of ONGC, or about 4.6 per cent stake, through the auction route would have cost the LIC about Rs 12,146.80 crore.
The value of investment at Saturday’s closing price works out to be Rs 11,234 crore, reflecting a notional loss of about Rs 912 crore to the insurance major in just two days.
Shares of ONGC closed at Rs 280.85 a piece, down 0.21 per cent on the BSE yesterday.
The government had earlier said it received an average price of Rs 303.67 for a share of ONGC, 4.71 per cent higher than the floor price of Rs 290.
“The volume weighted average price (of ONGC shares) was Rs 303.67 per share against floor price of Rs 290,” the Finance Ministry said in a statement. The stake sale yielded the government Rs 12,767 crore.
As of October-December quarter of 2011-12, Life Insurance Corporation of India had stake of 3.23 per cent in the ONGC.
With the fresh equity, total holding of the insurer has gone up to about 8 per cent. It will still be less than the 10 per cent investment cap fixed by insurance regulator IRDA.