Indian Oil Corporation to buy back over 3% of its total equity shares
The fuel retailer will spend around $624 million on the acquisition, its largest buyback in 17 years.
The state-owned Indian Oil Corporation (IOC) recently announced in a stock exchange filing that its board had approved the buy back of a little over 3% of its total equity shares. This cash infusion for IOC’s shareholders will particularly benefit the central government, which owns a 54% stake in Indian’s larges fuel retailer, informed Business Insider India.
The move also includes a dividend payout of almost $1 per share - a total payout of $931 million.
The aim of this transaction is to help the government, via the Department of Investment and Public Asset Management (DIPAM), in meeting its disinvestment target of $11 billion for fiscal 2019. In 2018, it has collected 68% of that amount.
The DIPAM plans to earn around $709 million through share buyback programmes of large state-owned enterprises energy firms, such as IOC, Coal India or Bharat Heavy Electricals, according to the Press Trust of India. As government policy, all public sector enterprises with a cash balance of over $142 million must undertake share buybacks.
It remains to be seen how IOC will make it through, since the oil company had a total debt of around $8.5 billion at the end of September 2018 and it also planning to incur in in additional expenses in the medium term.
