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The Central government has not given investment bankers applying to manage the proposed merger of Oil and Natural Gas Corporation (ONGC) and Hindustan Petroleum Corporation (HPCL) a waiver from the ‘conflict of interest’ clause.
While the bankers had requested the government to provide exemption from the existing conflict clause, the latter has reiterated its position, according to the Department of Public Asset Management (Dipam) website.
Bankers handling the proposed merger will not be able to take up any deals involving competitors of either ONGC or HPCL, or any deals involving the competitors’ assets. Foreign deals too will require the government’s approval.
This move by the government comes after it had provided exemption to the conflict clause in the case of the stake sale in Specified Unit Undertaking Trust (Suuti) and the initial public offering (IPO) of state-owned insurance companies.
“Unlike the previous deals where the government was only a single party, in the ONGC-HPCL deal both the entities are government-owned and hence, the government is taking a tough stance,” said an investment banker.
Among other changes in the terms and conditions of the offer, the government has reduced the number of issue managers from two to one. Further, all the road show expenses will be borne by the investment bankers.
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