The Oil and Natural Gas Corporation public issue has been oversubscribed 5.88 times.

However, retail investors bid for only 17.8 per cent of the stock, against the 25 per cent on offer, and will thus be allotted whatever they applied for at Rs 712.5 a share, a 5 per cent discount to the Rs 750 offer price.

The government, which sold 142.6 million ONGC shares through the offer, expects to raise Rs 10,695 crore (Rs 106.95 billion).

Divestment Minister Arun Shourie said the overall demand was for $15 billion and qualified institutional buyers bid for 13 times the stock meant for them.

Asked if the retail subscription was disappointing, Shourie said: "The response has been good despite the large size of the issue. The ONGC issue was one of the largest offers ever in the Indian equity market."

Of the shares offered in this issue, qualified institutional buyers have been allotted 46.2 per cent, high net worth individuals 24 per cent, retail investors 17.8 per cent, existing ONGC shareholders 10 per cent and employees 1.8 per cent.

Shourie said the government received 760,000 applications from retail investors and added that their entire demand would be met.

Commenting on the success of the issue, he said as many as 350 premium investors abroad had bid, while the Maruti IPO attracted only 120 such investors. Of all the investors approached in America, Europe and Southeast Asia, 67-88 per cent responded.

The sale of 142.6 million shares accounts for the government's 10 per cent holding in ONGC. After the offer, the government's stake in the company will fall to 74 per cent.

P Krishnamurthy, vice-chairman, JM Morgan Stanley, said: "It is a very positive response for a quality issue such as ONGC, which is a leader in its field, and with appropriate pricing, which clearly establishes that there is enough confidence in the India story and there is adequate depth to subscribe to such large issues." DSP Merrill Lynch, J M Morgan Stanley and Kotak Mahindra were the book runners to the issue.

Uday Kotak, chairman of Kotak Mahindra Capital Company, said: "It is a great moment for the Indian capital markets. This means that global size deals in which both global and domestic investors participate can be done on the Indian platform."

Merchant banking sources said the retail portion of the issue was subscribed just a little less than one time whereas the portion reserved for high net worth individuals was fully subscribed. The rest of the oversubscription came in the qualified institutional buyer category, they said.