National Hydroelectric Power Corporation’s (NHPC’s) offer for sale (OFS) saw lukewarm response from retail investors on Thursday as they bid for just 58% of the shares reserved for them. However, the issue has been oversubscribed 1.5 times in total with state-owned life insurance giant Life Insurance Corporation (LIC) having put in a large bid on Wednesday, according to people familiar with the development.
The OFS saw a total subscription of 1.57 times with bids coming in for 197 crore shares out of the 125 shares on offer. The issue closed on Thursday with domestic institutions and high net-worth individuals having subscribed to 156 crore shares of the 100 crore shares on offer for them.
According to analysts, the stock was being bought more as a dividend play rather than for capital appreciation; the dividend payout ratio in FY15 was 24.5%.
The government had proposed to sell 125 crore shares amounting to Rs 2,700 crore or 11.6% of the stake it owned in the power generator. The government currently holds 86% stake in the company which will come down to 74.6% on completion of the issue.
The floor price set for the offer was Rs 21.75, a discount of 5.6% from its Tuesday’s closing of Rs 23.05.NHPC’s stock on Thursday closed at Rs 21.15. According to data from the stock exchanges, NHPC has touched a high of Rs 24.40 and a low of Rs 15.55 in the last 52 weeks.
The OFS is the first disinvestment in the current financial year. The government has budgeted for Rs 56,500 crore from disinvestments in the current financial year. In February the government sold a 5% stake in power producer National Thermal Power Corporation (NTPC) and in March it offloaded a 5% stake in logistics player Concor. LIC had subscribed to nearly 41% of NTPC’s OFS.
Edelweiss Securities, HSBC Securities and Capital Markets and IDFC Securities are the investment bankers for the NHPC offer for sale. The government is considering the sale of a 10% stake in state-run oil explorer, Oil India.