India’s largest explorer ONGC’s follow-on-public issue, opening on April 5 and closing on April 8, plans to raise Rs 11,000-12,000 crore through sale of 5 per cent equity stake in the oil and gas explorer. This will make ONGC one of the first public enterprises to tap the capital markets in the new financial year. ONGC’s issue is likely to be followed by follow-on issues of Power Finance Corporation (PFC), Steel Authority Of India (SAIL) and Hindustan Copper, among others.

Finance minister Pranab Mukherjee has set target to garner Rs 40,000 crore in the financial year 2011-12 by selling equity stakes in government-run companies. “I intend to maintain the momentum on disinvestment in 2011-12 by raising Rs 40,000 crore,” finance minister Pranab Mukherjee had said in his budget speech on Monday.

In the present year, government has sold stakes in six government-run enterprises, raising Rs 22,144 crore against a target of Rs 40,000 crore, which was also mentioned by Mukherjee in his budget speech.

The Maharatna will file its red herring prospectus by mid-march, said a senior government official, who spoke on condition of anonymity.

“Price-band (of ONGC issue) will be the most important factor, considering the heavy under-recovery losses at present,” said Alok Deshpande, research analyst at Mumbai-based Elara Securities (India).

“Government will soon appoint one more independent director on the explorer’s board,” said the government official quoted above. At present, ONGC has four independent directors and five functional directors, including chairman, on its board. This is pre-requisite before coming up with a public issue.

At present, the government holds 74.14 per cent stake in the country’s largest public sector oil company. It plans to sell 10.6 crore-equity shares through the FPO.

Government has short-listed six merchant bankers to manage ONGC’s public issue — Bank of America Corp, Nomura Holdings, HSBC Holdings, JM Financial Services, Citigroup and Morgan Stanley.