Mumbai: Oil India Ltd (OIL) will hit the market with an initial public offering (IPO) on September 7. The offer will be open from September 7 to 11, a source close to the development said.

The price band for the IPO is likely to be fixed on August 25, the source said. OIL management is currently holding meetings with bankers in Mumbai and would be visiting Hong Kong and Singapore over the next couple of days.

OIL, which produces 3.5 million tonnes of oil annually, will offer 2.64 crore equity shares to the public through the IPO, while the government will simultaneously sell 10 per cent of its stake in the company to state refiners.

An 11 per cent fresh equity will be sold in the IPO while the government would divest 10 per cent of its stake at the IPO price. Post-IPO and disinvestment, the Government’s stake in the company will decrease from 98.13 per cent to 78.5 per cent.

The source said the IPO proceeds would be used to fund capex requirement for 2009-10 and 2010-11 when it had planned Rs 2,300 crore and Rs 2,400 crore expenditures respectively.

OIL has started discussions with bankers, including HSBC Securities & Capital Markets, JM Financial Ltd, Citigroup Global Market India and Morgan Stanley India for the IPO.

source: Sify Finance

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