Pakistan: OGDC Secondary Offer of Shares

OGDCLAs per a notice issued by Karachi Stock Exchange the Government of Pakistan (GoP) plans to sell its holding in Oil and Gas Development Company (OGDC) through secondary offering in the form of shares and Global Depository Shares (GDSs). Currently, OGDC has a free float of 15% or 645 million shares while 75% or 3,226 million shares and 10% or 430 million shares rest with the GoP and OGDC Employee trust, respectively. The floor price/allocations between shares and GDS are expected to be announced around middle of October 2014.

According to the details  the GoP plans to offload 10% or 322 million shares of its holding, a move which will enhance OGDC’s free float from the present 15% to 22.5%. With the reported aim of raising US$800 million from the transaction, OGDC’s indicative offer price comes to PkR 248/share. While the final floor price is yet to be decided, a discount cannot be ruled out going by the size of the offer. Lately, the GoP had offered UBL through secondary offer was around 10% discount to its then prevailing market price while PPL’s floor price was set at a 5% discount to then prevailing market price.

In this instance, analysts believe UBL is the better proxy due to size of transaction and target of attracting foreign investment. As such, a 10% discount to the current market price would imply a floor price of PkR236/share for OGDC. While the stock has risen in intraday trade, it is believed further decline can’t be ruled out until its offering date.


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