Centre announces one of biggest OFS, set to sell up to 10 pct stake in NTPC to raise Rs 13,850 cr

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New Delhi | Updated: August 29, 2017 8:53:49 AM

Govt to sell 5% stake at a floor price of `168 a share, with a greenshoe option to sell another 5%, which together could fetch it about `13,852 crore disinvestment revenue

The government could sell up to 82.45 crore shares if the entire 10% stake sale is fully subscribed. It could be the second biggest OFS so far after 10% stake sale in Coal India OFS fetched the Centre Rs 22,557.63 crore in FY15.

In one of the biggest offers for sale (OFS) in recent times, the Centre on Monday announced 5% stake sale in thermal power major NTPC with a green-shoe option to retain another 5%, which together could fetch the Centre about Rs 13,852 crore disinvestment revenue.  The two-day issue will be open for subscription by institutional investors on Tuesday, a senior government official said. Retail investors can bid in the OFS on Wednesday. “The NTPC shares will be offered at a floor price of Rs 168 apiece, at a discount of over 3%,” the official said. On Monday, the company’s shares closed at Rs 173.35, up 2.48% from the previous closing price.

The government could sell up to 82.45 crore shares if the entire 10% stake sale is fully subscribed. It could be the second biggest OFS so far after 10% stake sale in Coal India OFS fetched the Centre Rs 22,557.63 crore in FY15. The government has a rolling pipeline of PSUs for OFS transactions at the opportune time. Seven more PSUs lined up including Indian Oil, PFC and NHPC, which could fetch it another Rs 24,000 crore. It plans to sell 10% each in NHPC, PFC and SAIL while 3% in Indian Oil, 15% in Neyveli Lignite and 5% in Rural Electrification. For 2017-18, the government has set an ambitious disinvestment target of Rs 72,500 crore, 58% higher than the receipt of `46,247 crore in 2016-17. It plans to raise Rs 46,500 crore from disinvestment in PSUs, Rs 15,000 crore from strategic disinvestment and `11,000 from listing of general insurance companies this year. Though the target is stiff, the Centre could reach the high disinvestment target via its proposed 51.11% stake sale in HPCL to ONGC for about `30,000 crore, a planned new diversified exchange traded fund and IPOs in nearly ten PSUs. So far this year, the Centre has garnered Rs 9,302 crore in disinvestment receipt, including `4,153 crore from strategic sales from SUUTI Holdings.

Earlier this year, the Centre had exempted NTPC from a buyback obligation, which could have fetched the exchequer nearly `8,000 crore, after it flagged a whopping `28,000-crore capex plan for 2017-18. The state-owned power generation behemoth said last week that it was also looking to raise Rs 15,000 crore through bonds and debentures. The company would seek shareholders’ approval in this regard in the upcoming annual general meeting to be held here on September 20. The company would also declare the final dividend for FY17 on that day.

The company, which has about 24 GW of capacity under construction, invested Rs 5,070 crore, or 18% of its annual target of Rs 28,000 crore, in Q1 FY18. NTPC’s total income rose y-o-y to Rs 20,541.9 crore in Q1 of FY18. The profit after tax for the period increased by nearly 12% to Rs 2,618.2 crore. The country’s largest power generator, with an installed capacity of 51,671 MW, achieved plant load factor of 79.1% as against the national average of 62.5% in the period.

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