BackGovernment seeks to raise Rs5,000 crore from 5% stake sale in NTPC
The government has set a floor price of Rs122 per share for the sale that will help raise a little more than Rs5,000 crore
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Mumbai: The government will sell a 5% stake in state-owned power producer NTPC Ltd through a two-day offer for sale (OFS) that begins on Tuesday.
The government has set a floor price of ₹ 122 per share for the sale that will help raise a little more than ₹ 5,000 crore, NTPC said in a stock exchange filing on Monday.
NTPC’s offer, comprising 412.2 million shares, is the first after the Securities and Exchange Board of India (Sebi) tweaked OFS rules last week.
According to the new rules, institutional and other non-retail investors will be permitted to place bids on the day of offer (T). Retail investors and those non-retail investors who have placed their bids on T-day and have chosen to carry forward their bids will be able to bid for shares one day after the trade date (T+1 basis).
If the offer is successful, the government’s stake in NTPC will decline to 69.96% from 74.96% as of 31 December.
NTPC is the sixth divestment by the government this fiscal. So far, the government has managed to raise ₹ 13,277 crore through five asset sales, far short of its target of ₹ 41,000 crore for the current fiscal.
In August, the government appointed investment banks to sell stakes in 10 firms, which were clubbed into two baskets.
Basket one comprised Oil India Ltd, Container Corp. of India Ltd, NMDC Ltd, MMTC Ltd and India Tourism Development Corp. Ltd.
NTPC, Bharat Electronics Ltd, Engineers India Ltd, Nalco Ltd and Hindustan Copper Ltd were part of the second basket.
The appointments for basket one firms was scrapped later because of poor response from investment banks, forcing the government to appoint banks for individual firms from the basket.
In November, it began hiring bankers for the divestment of its stake in Container Corp.
SBI Capital Markets Ltd, ICICI Securities Ltd and Yes Bank Ltd were chosen as investment bankers for the companies in the first basket.
SBI Capital Markets, ICICI Securities, Edelweiss Financial Services Ltd and Deutsche Bank AG were selected to manage the sale of stakes in the second basket of companies.
The government has also hired bankers for divestment in Coal India Ltd but is yet to announce its launch. Last month, the government invited merchant bankers to bid for handling the initial public offering (IPO) of Cochin Shipyards Ltd.
Shares of NTPC fell 2.05% to ₹ 126.85 on BSE. The stock has touched a high of ₹ 164.70 and a low of ₹ 107.20 in the past 52 weeks, according to exchange data.
Tuesday’s share sale in NTPC will be the fourth public offering in the thermal power producer. The firm went public in October 2004 through an IPO by the firm. The government sold a 5% stake to raise ₹ 2,684.07 crore.
The government sold another 5% through a follow-on public offer (FPO) in February 2010 that helped raise ₹ 8,480.10 crore. The government sold an additional 9.5% stake in the firms through an OFS to raise ₹ 11,457.54 crore, data from the department of disinvestment showed.
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