November 23, 2006	Thursday	Ziqa'ad 1, 1427

KARACHI, Nov 22: As the book building process of the offer for shares of Oil and Gas Development Company Limited (OGDC) to international investors is underway, an official of the Privatisation Commission pointed out that the offer has been mandated to be “up to” 15 per cent of the company’s capital and not necessarily the exact figure of 15 per cent.

In reply to a query by Dawn, the official tried to dispel the impression that because of a potential large number of shares out for divestment, sale price of Global Depository Shares (GDS) to foreign investors could be at a significant discount to the market price of the stock.

He stated that the ‘strike price’ of the GDS would be determined by the demand curve but “there was no intention to sell the shares of the country’s largest petroleum exploration and production company at a throwaway price”.

Another official at the Privatisation Commission corroborated that statement and explained that approval from the Cabinet Committee on Privatisation (CCoP) for the sale of OGDC shares “up to” 15 per cent had been obtained, but the offer need not necessarily be to divest all those shares. The reason for seeking approval for a “maximum” number of sale of shares, instead of say five or 10 per cent was to avoid the mandatory requirement of returning to the CCoP each time to get a nod for the sale of more shares, if need be.

The government is in the process of divesting its shareholding in OGDC up to 15 per cent by way of issuance of GDRs to local and international institutional investors and domestic market (secondary public offering in domestic market). The (maximum) 15 per cent shares in OGDC makes a total of 645.139 million shares.

The book-building process has opened on November 15 and marketing road-shows are being held in Hong Kong, Singapore, Middle East, New York and London. The Privatisation Commission and company management said on Wednesday that the road-shows were receiving warm response from institutional investors. The process would be completed on November 30. Trading of GDS on the London Stock Exchange is likely to begin from December 6.