* Solid debut quells concerns of waning appetite for IPOs
* Govt to sell stakes in at least five firms by March 2010
* Oil India to use cash to buy foreign producing assets
* Shares rise up to 10 pct, end up 8.6 pct (Adds detail, background, comments from chairman, analysts and govt official; updates share price)
By Pratish Narayanan & Narayanan Somasundaram
MUMBAI, Sept 30 (Reuters) - Oil India (OILI.BO) gained as much as 10 percent on its trading debut after the state explorer’s heavily subscribed $570 million IPO, boosting government plans for selling stakes in other companies.
Analysts had expected Oil India’s shares to rise 5-7 percent, and the better-than-expected listing will allay fears of waning investor appetite following tepid recent market debuts for state-run hydropower producer NHPC Ltd (NHPC.BO) and private utility Adani Power (ADAN.BO) that had together raised $1.9 billion.
Oil India’s initial public offering was subscribed more than 30 times, the third major Indian IPO this year and second by a state firm, as IPOs revived following an 18-month lull after share markets plunged in 2008.
“I think the debut has been fantastic. This will give a huge boost to the IPO market,” said Alex Mathews, head of research at Geojit BNP-Paribas Financial Services.
“We had expected there might be some profit booking at the level of 1,100 rupees to 1,120 rupees, but the stock has easily managed to rise past those levels,” he said.
Shares in the oil and gas explorer ended up 8.6 percent at 1,140.55 rupees, compared with the IPO price of 1,050 rupees, after rising as much as 10.1 percent during trade. India's benchmark BSE index .BSESN rose 1.6 percent.
Analysts had worried NHPC’s muted debut would derail government plans to sell stakes in other companies as it tries to lift itself out of a yawning fiscal deficit and raise money to fund expansion in Asia’s third-largest economy.
India plans to sell stakes in at least five state firms by the end of the financial year in March 2010, a government official said after Oil India made its stock market debut. [ID:nBMA006033]
“Sentiment had been shattered by the weak NHPC listing, but now with Oil India’s performance, investors will be more confident,” Geojit’s Mathews said.
NHPC rose 1.9 pct on listing day and is now trading at 34.55 rupees, below its IPO price of 36 rupees.
Oil India expects capital expenditure of 45 billion rupees ($935 million) over two years, with 60 percent going towards exploration and production, Chairman N.M. Borah said.
The company has $1.5 billion of cash, which it plans to use for buying producing assets overseas or taking over a foreign firm that owns producing properties.
“With regard to crude oil, we are looking at assets that have 10,000 to 20,000 barrels per day of capacity,” Borah said.
The company, which mainly operates in India, is exploring crude oil and natural gas in Egypt, Gabon, Iran, Libya, Nigeria, Timor Leste and Yemen.
Oil India is now looking to buy properties in regions including South East Asia, Russia and Australia, Borah said.
Oil India had estimated, proved and probable crude oil reserves of about 575.4 million barrels as of March 31, 2009.
JM Financial, Morgan Stanley India, Citigroup Global Markets India and HSBC Securities and Capital Markets managed the IPO.
Indian firms have raised $15 billion in share sales so far this year, surpassing 2008 volumes, helped by a 75 percent rally in the BSE index this year. (Editing by Ranjit Gangadharan and Lincoln Feast)