Govt plugs into NTPC share sale

The government has fixed a floor price for the sale of over 41.22 crore shares in NTPC at Rs 122 a piece, a 3.82% discount to its closing price on the BSE.

The base price for the NTPC offer for sale (OFS) has been fixed at Rs. 122 per share.

The NTPC will go under hammer for two days with the first day reserved for institutional bidders.

While 80 per cent of the shares were up for sale on Tuesday, the balance 20 per cent has been reserved for the retail investors in the second round on Wednesday.

Post the offer, the government’s stake in NTPC Ltd will reduce to 69.96 per cent.

SBI Cap Securities, ICICI Securities, Edelweiss Securities and Deutsche Equities are the investment bankers in the NTPC stake sale.

Foreign investors accounted for about 23 percent of the bids in the NTPC offering, which the government’s divestment secretary Neeraj Gupta called “a good response”. “However, we see this as an unlikely scenario, given the strategic importance of NTPC as the country’s largest power generator, accounting for 25 per cent of power generation and 17 per cent of installed conventional power generation capacity”, Mr Tyagi added.NTPC’s rating could be upgraded if India’s sovereign rating is upgraded and if NTPC’s underlying credit quality remains in line with its current BCA of baa3.

The bidding would continue till 1530 hours on both the days. According to sources, state insurance company LIC, which has rescued many stake sales, including the recent International Olympic Committee disinvestment, this time around bid for shares aggregating to less than Rs 3,000 crore. In August, the government sold 10% in Indian Oil for almost Rs 9,400 crore. This is against a target of Rs 69,500 crore for 2015-16.

NTPC will be the first company to hit the market under the revised offer-for-sale (OFS) guidelines of Sebi.

Volatile market conditions have affected the government’s disinvestment plan, which mostly have commodity and oil stocks in the pipeline.