India will sell a 10 percent stake in top state-run refiner Indian Oil Corp Ltd today through a stock market auction, the government said, as part of its drive to raise funds by selling off assets.

At the current market price of the stock, that stake would be valued at about US $ 1.5 billion.

The government owns 68.6 percent of IOC, whose stock hit a record high in July and has outperformed the broader market this year as the refiner benefits from cheaper global crude prices.

It will sell about 242.8 million shares in Indian oil in today’s auction, for which it set a floor price on Saturday. Individual investors can buy the stock at a 5 percent discount to the final bid price, the government said in a regulatory filing.

New Delhi is seeking to raise as much as US $ 11 billion by selling stakes in state-run companies this fiscal year, crucial to narrowing the fiscal deficit to a planned 3.9 percent of gross domestic product in 2015/16.

The government has missed its divestment target for the last five years in a row.

Last month, the government raised about US $ 260 million from the sale of a 5 percent stake in Power Finance Corp Ltd after the auction received bids for more than twice the number of shares on offer.

Citigroup, Deutsche Bank, Nomura and Indian investment banks JM Financial and Kotak Securities are the managers of the Indian Oil share sale.
REUTERS