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NHPC Issue Oversubscribed 23 Times

13 August, 2009

The initial public offer (IPO) of government owned hydro power generation firm NHPC has seen investors applying for shares worth a staggering Rs 1.43 lakh crore ($29.5 billion), almost 24 times the issue size of just around Rs 6,000 crore.

Enam Securities, Kotak Mahindra Capital and SBI Capital Markets were the book running lead managers to the mega issue. Given the high proportion of bids at Rs 36, the issue is likely to be priced at the upper end of the price of Rs 30-36.

The issue which was oversubscribed by all sections of investors (barring employees) on the penultimate day itself, had witnessed special interest from institutional investors. The institutional pack was led by domestic institutional investors probably sensing NHPC as a safe bet to park cash.

But the FIIs pitched in big time on the final day applying for shares worth over $12 billion. Total institutional portion of the issue was oversubscribed 29 times.

Non institutional investors including both HNIs and corporates also lapped up the issue oversubscribing their portion of the IPO more than 55 times. Retail investors applied for shares around four times what was reserved for them. This sends positive signals of retail participation in the primary market.

The total fund commitment at the close of the issue on Wednesday was just about the same as the issue of Reliance Petroleum in April 2006. That issue from the house of Mukesh Ambani led Reliance Industries in the middle of the bull run had also received application commitment of around Rs 1.43 lakh crore, making it the biggest issue at that time.

But younger brother Anil Ambani’s Reliance Power which floated the biggest ever IPO in India in January 2008, had surpassed that mark . It set a new benchmark with investor commitments of over Rs 7.5 lakh crore(~$188 billion at that time) making it the biggest blockbuster issue ever seen in India.

Within the public sector pack, the NHPC issue generated much more interest that the ONGC issue which received investor commitments of Rs 72,500 crore, setting a right stage for the other issue of state owned OIL Ltd which is expected in the next few weeks.stic institutional investors probably sensing NHPC as a safe bet to park cash.

The total fund commitment at the close of the issue on Wednesday was just marginally short of the issue of Reliance Petroleum in April 2006 during the bull run. That issue from the house ofMukesh Ambani led Reliance Industries had received application commitment of more than Rs 1.43 lakh crore, 52 times the issue size.

Reliance Power which floated the biggest ever IPO in India in January 2008, had managed to receive investor commitments of over Rs 7.5 lakh crore (~$188 billion at that time) making it the biggest blockbuster issue ever seen in India.

But the NHPC issue generated much more interest that the ONGC issue which received investor commitments of Rs 72,500 crore, setting a right stage for the other issue of state owned OIL Ltd.

Enam Securities, Kotak Mahindra Capital and SBI Capital Markets were the book running lead managers to the mega issue.


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NHPC Issue Oversubscribed 23 Times

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