Govt may raise Rs 5,000 cr from NTPC OFS, retail demand tepid

By: |
Mumbai | February 25, 2016 12:11 AM

The offer for sale (OFS) of National Thermal Power Corporation (NTPC) saw tepid response from retail investors on Wednesday.

The offer for sale (OFS) of National Thermal Power Corporation (NTPC) saw tepid response from retail investors on Wednesday. As per the BSE data, the retail portion was subscribed 0.44 times as retail investors bid for 3.63 crore shares against 8.24 crore shares reserved for the category.

As per the new OFS regulations, unsubscribed retail bids will be allotted to institutional investors who chose to carry forward their bids from Tuesday. The carry forward institutional bids on Wednesday at 21.07 crore shares were more than four times the unsubscribed retail book.

The overall issue was subscribed 1.53 times as the stake sale saw bids for 63.25 crore shares, against 41.22 crore shares on offer.

Shares of NTPC plunged below the OFS floor price of R122 on Wednesday. The scrip closed down 4.2% at R118.70 on the BSE, data showed.

The government proposed to divest 5% of its stake in NTPC through the OFS, a stock exchange filing by NTPC said. Based on the floor price, the government was to raise at least Rs 5,028 crore through the stake sale, and it is likely to mop up around Rs 5,030 crore.

Post the stake sale, the government’s holding in NTPC comes down to 69.96% from 74.96%. SBI Capital, ICICI Securities, Edelweiss Financial Services and Deutsche India were the book running managers for the offering.
In the institutional category, more than 40% of the bids received were from state-owned Life Insurance Corporation.

Foreign portfolio investors (FPIs) had bid for Rs 925.45 crore worth of shares, which is close to 12.7% of the total subscriptions received for the institutional book, disinvestment secretary Neeraj Gupta said at a media briefing.

The stake sale in NTPC is part of the government’s disinvestment programme. The FY16 Budget outlined a disinvestment target of Rs 69,500 crore, of which Rs 41,000 crore was to be mopped up through regular stake sales and Rs 28,500 crore via strategic disposals.

The government has raised Rs 13,340 crore so far in FY16. The NTPC stake sale is the second-largest offering the current fiscal after that of Indian Oil Corp, where the government had raised more than Rs 9,370 crore.

NTPC’s stake sale is the first issue since Sebi tweaked the OFS regulations. As per the new regulations, institutional and other non-retail investors will be permitted to place bids on the day of offer (T) while retail investors will be able to bid for shares one day after the trade date (T+1). Further, non-retail investors who have placed their bids on T day and have chosen to carry forward their bids to T+1 day will be allowed to revise their bids.

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