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Govt looking to mop up $2.1 bn from NTPC stake sale

State-run power producer NTPC Ltd said on Monday the government will sell part of its stake in the company to raise as much as Rs 13,850 crore ($2.17 billion).

The share sale is part of the government’s disinvestment plan for 2017-18 to mobilise a record Rs 72,500 crore through capital receipts that comprise minority sales and strategic disinvestments as well as listing of state-owned companies.

The issue has a base size of 412.27 million shares, representing a 5% stake, and an over-subscription option of an equal additional stake, the company said in a stock-exchange filing.

The government has set the floor price of the offer at Rs 168 apiece, a 3.08% discount to Monday’s closing price. Retail investors will get an additional 5% discount on the cutoff price. Shares will be issued on a proportionate basis in case of overallotment.

Following the sale, the government’s stake in NTPC will drop to 59.74% from 69.74% at the end of June 2017.

Citigroup Global Markets India, Jefferies India, Axis Capital and Yes Securities (India) are advising the government on the sale.

So far this fiscal year, the government has raised about Rs 9,300 crore by selling minority stakes in nine companies. This includes six listed state-run companies as well as initial public offerings of Cochin Shipyard Ltd and housing and urban infrastructure financier Hudco Ltd.

The biggest chunk of the amount was raised in June when the government sold a 2.6% stake in engineering giant Larsen & Toubro Ltd—held via Specified Undertaking of The Unit Trust of India—for Rs 4,158 crore.

Among other share sales, the government offloaded a minority stake in Hindustan Copper Ltd for about Rs 400 crore earlier this month.

As part of the divestment plan, the government has lined up IPOs of several companies including that of state-owned insurance firms New India Assurance and General Insurance Corp of India, which recently filed documents for the share sales.

This pipeline could help the government achieve a record fundraise and meet the disinvestment target for the first time in a decade.

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