NTPC offer for sale opens for retail investors after institutions overbid 41% yesterday

Government’s 7,000-14,000 crore stake sale in India’s biggest power producer NTPC via a two-day offer-for-sale (OFS) which opened for retail investors today got subscribed 1.87% as at 10:35 am. Retail investors, who will be offered a 5% discount, can bid for shares today till 3:30 pm as over 8.24 crore shares have been reserved for them. The government is selling over 41.22 crore shares, or 5% holding at a floor price of Rs 168 per share, through the two-day offer for sale (OFS), with an option to retain a similar portion in case of over-subscription. Shares of NTPC were trading little changed, up 0.33% at Rs 168.95 on BSE.

The share sale has a floor price of Rs 168, and a 5% stake sale would fetch Rs 7,000 crore to the exchequer. The OFS was subscribed 1.41 times on the first day of bidding following a good response from non-retail investors. On the opening day of the sale, which was open to non-retail investors, over 46.26 crore shares were bid till the closing of day one, according to stock exchange data. This was 1.41 times of the 32.98 crore shares reserved for them. However, NTPC shares were the biggest loser on the benchmark Sensex yesterday, fell as much as 2.8% to close at Rs 168.5 on the BSE. According to the offer document, the company employees will be eligible to apply for shares up to Rs 2 lakh each only.

The government has so far this fiscal raised over Rs 8,800 crore through disinvestment in six companies, including selling a stake in L&T through Specified Undertaking of Unit Trust of India (SUUTI), and one share buyback. This is against Rs 72,500 crore targeted to be raised in 2017-18 through stake sale in PSUs. This includes Rs 46,500 crore from minority stake sale, Rs 15,000 crore from strategic disinvestment and Rs 11,000 crore from a listing of PSU insurance companies.

The success of NTPC offer for sale would be crucial for helping the government in meeting its ambitious divestment target for the financial year. While the initial share sales in Housing and Urban Development Corporation and Cochin Shipyard fetched Rs 1,207 and Rs 470 crore, respectively, the sale of a stake in Larsen & Toubro-owned through Specified Undertaking of the Unit Trust of India (SUUTI) fetched Rs 4,153 crore.