The Centre has reportedly floated a Cabinet note on the proposal to sell a 10% stake in power generation company National Thermal Power Company (NTPC) next financial year.
The move is part of the government’s record FY16 disinvestment plan of R69,500 crore through which it aims to achieve its Budgeted fiscal deficit target of 3.9% next fiscal.
The government is yet to float a proposal seeking financial and legal advisors. While more clarity is awaited, it is projected that government may offer about 4-5% discount to retail investors.
The sale of 10% stake in India’s largest power company corresponds to a little more than 82.45 crore shares and could fetch R12,600 crore at current market price. The government owns 74.96% stake in the New Delhi-based NTPC, stock exchange data as on December 2014 show.
The NTPC scrip declined more than 3% on Wednesday to R152.90 apiece, reacting to stake-sale plan reports. Trading volume spiked nearly 2.7% the stock’s 30-day average volume. More than 1.75 crore NTPC shares were traded on the BSE and the NSE against an average 65.37 lakh shares traded in the previous 30 trading sessions, Bloomberg data showed.
Apart from NTPC, the government plans to sell stake in additional 10 PSUs, including Power Finance Corp (R1,866 crore), Rural Electrification Corp (R1,712 crore), Indian Oil Corp (Rs 8,483 crore), Bharat Heavy Electricals (R3,159 crore) and NMDC (R5,226 crore).
The FY16 disinvestment target also comprises strategic sale in Hindustan Zinc (HZL) and Balco to Vedanta Resources, as well as selling stake in certain private companies held through the Specified Undertaking of the UTI (SUUTI).
The government will also look at reducing its stake in some of the 33 PSU companies that need to comply with the Securities and Exchange Board of India (Sebi) minimum public shareholding norms. The list includes Coal India (4.65%), which could fetch the exchequer close to R11,300 crore.
Under the Sebi rules, all listed companies are required to have at least 25% public shareholding till June 2017 or three years from the date of listing for companies listed after June 2014.
The Centre has so far raised R24,277 crore by selling stake in Steel Authority of India (SAIL) and Coal India (CIL) – the largest equity offering in the history of Indian capital markets. The government pared its target to R31,350 crore from the intially Budgeted target of R43,425 crore.
Finance minister Arun Jaitley recently indicated an aggressive disinvestment programme to meet the fiscal deficit target of 4.1% for FY15 and 3.9% for FY16.