The Rs 6,000-crore initial public offer (IPO) of state-run NHPC Ltd received an overwhelming response from investors, getting subscriptions of over 23.62 times the shares on offer. The issue received bids for a total of 3,961.68 crore shares against an issue size of 167.73 crore shares with the total number of bids received at the cut-off price standing at 160.74 crore shares, according to the data available with the National Stock Exchange (NSE). The price band for the issue was Rs 30- 36.
According to the data with the book-running lead managers to the issue, the high net worth investors (HNIs) portion was subscribed by a whopping 56 times, the qualified institutional buyers (QIB) portion by over 29 times and the retail category by over three times.
This is the first IPO from a state-run enterprise in last 17 months after Rural Electrification Corporation (REC) went public in February 2008 and the first after the UPA assumed office for the second term. The issue comprises of 5% stake sale by the government and a 10% infusion of fresh equity. The success of NHPC is a strong indicator of the markets liking for state enterprises, according to market experts.
?The phenomenal success of the NHPC-IPO shows that public issues from government enterprises have huge demand in the market. Further it is also an indication that good quality issues will continue to see good participation from investors across the board,? said Srinivasan Subramanian, head ? investment banking ? Enam Financial Services, which is one of the book-running lead managers to the issue.
The huge response to the NHPC issue and the recent offers from Mahindra Holidays and Resorts India Ltd (MHRIL), a subsidiary of Mahindra Group and Adani Power Ltd shows that there is ample liquidity in the system and investor?s confidence is slowly returning back towards the primary market.
Earlier, the Rs 300-crore issue from MHRIL Mahindra that hit the market during June 2009 was oversubscribed by over 10 times while the Rs 3,000 crore issue from Adani Power, which went public last month got subscribed by over 21 times.
?Going by the quality of the issue, the response was very much in line with expectation. The company has got a strong balance sheet and is in a sector which is having a huge demand. Overall it is very healthy to see the IPO appetite returning back,? said Amitabh Chalraborty, president – equity, Religare Securities.
He added that disinvestment will be big theme going forward. ?The success of NHPC will give the government sufficient will to come out with the stake sale of more number of public sector undertakings?.
The public offer from Oil India is the next big issue from a state run enterprise that the market is keenly looking forward that is expected to hit the market during the first week of September 2009.
