Indian Oil Corporation will buy 1 crore (10 million) equity shares or five per cent stake in Oil India Ltd before the PSU explorer gets listed on the bourses later this month.
"We will be buying one crore shares of Oil India, but we are waiting for the government to fix the date of purchase," IOC chairman, Sarthak Behuria, told PTI in Mumbai.
The PSU refiner is likely to shell out Rs 1,100 crore (Rs 11 billion) to pick up a five per cent stake in OIL, he said.
Oil India Ltd, the nation's second-largest state-run explorer, last week hit the capital market to raise funds for expansion.
The government on Monday fixed the issue price of the share at Rs 1,050 per share, raising about Rs 4,982 crore (Rs 49.82 billion).
The public issue of OIL, which closed on September 10, was subscribed nearly 31 times, generating demand for shares worth over Rs 85,576 crore (Rs 855.76 billion).
The company offered 11 per cent fresh equity (or 2.64 crore equity shares) to the public through the IPO at a price band of Rs 950-1,050. Alongside the IPO, the government will disinvest 10 per cent of its stake in the company to state-run refiners at the IPO price.
At the higher end of the price band, IOC will have to shell out Rs 1,050 crore (Rs 10.5 billion) to buy the five per cent stake.
Post-IPO and disinvestment, the government's stake in the company will decrease from 98.13 per cent to 78.5 per cent.
Other state refiners, Bharat Petroleum Corporation and Hindustan Petroleum Corporation, will also pick up 2.5 per cent stake in Oil India each.
Oil India is scheduled to get listed on the stock exchanges on September 30.
