Government to sell 11.36% stake in NHPC, may raise Rs 2,700 crore

In the first disinvestment of current fiscal, the government will on Wednesday sell 11.36 percent equity shares in electricity generator NHPC Ltd at Rs 21.75 apiece to raise about Rs 2,700 crore.

New Delhi: In the first disinvestment of current fiscal, the government will Wednesday sell 11.36 percent equity shares in electricity generator NHPC Ltd at Rs 21.75 apiece to raise about Rs 2,700 crore.

The issue price of Rs 21.75 a share is at a discount of 5.6 percent to NHPC's closing price of Rs 23.05 on BSE.

The sale of 125.76 crore shares will happen over two days, April 27 for non-retail investors and on April 28 for retail investors, according to Notice for Offer of Sale.

The government holds 85.96 percent in NHPC and selling of over 125 crore shares or 11.36 percent stake would help it comply with the minimum public shareholding norm.

A minimum of 20 percent of the shares on offer have been reserved for allocation to retail investors, it said adding retail investors will be allocated shares at a discount of 5 percent to the cut-off price.

Retail investors mean an individual investor who places bids for shares of total value of not more than Rs 2 lakh.

Also, a minimum of 25 percent of the offer size has been reserved for mutual funds and insurance companies.

No single bidder other than mutual funds and insurance companies shall be allocated more than 25 percent of the offer size.

"Non-retail investors shall have an option to carry forward their bids from T-day (April 27) to T-1 day (April 28). Non-Retail investors choosing to carry forward their bids to T+1 day are required to indicate their willingness to carry forward their bids," it said.

Edelweiss Securities Ltd, HSBC Securities and Capital Markets (India) Pvt Ltd and IDFC Securities Ltd are lead manager of the issue.

NHPC will be the first share sale of Department of Investment and Public Asset Management (DIPAM), earlier called Department of Disinvestment, this fiscal. It has been set an ambitious target of Rs 56,500 crore to raise from disinvestments in the year ending March 31, 2017.

NHPC would be the first PSU stake sale on the block.

The government has already lined up over a dozen PSUs for stake sale in the current fiscal.

The state-run would be the third PSU to be sold under the new offer for sale rules notified by market regulator Sebi. While institutional investors would bid in the first day of the OFS, the retail investors would get to bid on the second day.

NHPC, under the administrative control of power ministry, is engaged in generating power through conventional and non-conventional sources and is dedicated to the planning, development and implementation of an integrated and efficient network of power projects in India. 

Budget for 2016-17 has set a disinvestment target of Rs 56,500 crore. Of this, Rs 36,000 crore is estimated to come from minority stake sale in PSUs and the remaining Rs 20,500 crore is projected to come from strategic sale in both profit and loss-making companies.

The government in 2015-16 had mopped up the highest ever PSU disinvestment proceeds of Rs 25,020 crore.

For current fiscal, Finance Ministry has drawn up a list of 16 PSUs including ONGC, Oil India and Coal India for disinvestment, which at current prices could fetch the exchequer Rs 40,000 crore.

The list includes state-owned companies such as NMDC, MOIL, MMTC, National Fertilisers, NHPC, NALCO and Bharat Electronics.

Listing conditions for participating in NHPC OFS, the notice said non-institutional investors shall deposit 100 percent of their bid value in cash up-front with the clearing corporation at the time of placing bids.

"Institutional investors have an option of placing bids without any upfront payment," it said. "Retail investors may enter a price bid or opt for bidding at the cut-off price."