The government has appointed Kotak Mahindra Capital Co, DSP Merrill Lynch and JM Morgan Stanley as book runners for the public issue of 10 per cent equity shares in state exploration firm Oil and Natural Gas Corporation.

The three merchant bankers have been hired by the government for a transaction fee of 0.075 per cent of the amount realised in the mega public issue, divestment ministry sources said.

The government, last week, decided to sell 10 per cent equity each in ONGC and gas transmission company Gail Ltd through a public offering in the domestic market to meet the unrealised divestment target of Rs 13,200 crore (Rs 132 billion) for the current fiscal.

Among the five merchant bankers who bid for being appointed as book runner for the issue, Kotak quoted the lowest transaction fee.

DSP Merrill Lynch and Morgan Stanley quoted transaction fee a shade above Kotak and were included in the consortium at Kotak's transaction fee, to manage the issue that will be done through the book building route.

Others shortlisted included ICICI Securities and HSBC Securities and Capital Markets.

A consortium of two merchant bankers will be appointed for the Gail public issue.