Tuesday, February 23, 2016

Ahead of budget, can govt mop up Rs 5,000 cr from NTPC stake sale?

WITH less than one week left for the presentation of the Union budget by Finance Minister Arun Jaitley, the government will today sell five-percent stake in India's largest power producer NTPC to raise Rs 5,030 crore.
It will be the sixth PSU share sale this fiscal and will be the first under Sebi's revised...
offer for sale (OFS) rules that allow the bidding for shares spread over two days.
The government has fixed a floor price for sale of over 41.22 crore shares in NTPC at Rs 122 apiece, a 3.82 percent discount to its closing price on the BSE.
While the issue would open for institutional bidders today, the retails investors, for whom 20 percent shares have been reserved, will get to bid on February 24.
The NTPC share sale would fetch about Rs 5,030 crore to the exchequer.
The govt has mopped up Rs 12,701 crore from disinvestment in FY16 so far
The bidding would remain open from 0915-1530 hours on both the days.
A 5 percent additional discount would be offered to retail investors, which are those who bid for shares worth not more than Rs 2 lakh.
The Cabinet in May had approved the 5 percent stake sale in NTPC. The government holds 74.96 percent in the firm. It had last sold stake in NTPC in February 2013.
The disinvestment department has held roadshows in Singapore, Hong Kong, London and in the US.
So far this fiscal, government has raised over Rs 13,300 crore through disinvestment in five PSUs -- EIL, Indian Oil Corp, PFC, REC and Dredging Corporation. This is against a target of Rs 69,500 crore for 2015-16. Volatile market conditions have affected the government's disinvestment plan, which mostly have commodity and oil stocks in the pipeline.
Under the Sebi's modified OFS rules, allocation shall be at or above the floor price on price priority basis at multiple clearing prices. The allocation to retail investors, who have the option to bid at the cut off price, can be below the floor price on account of retail discount offered, it added.
"The non-retail investors who have placed their bids on T day and have chosen to carry forward their bids to T+1 day, shall be allowed to revise their bids on T+1 day as per the Sebi OFS Circulars," NTPC said in a statement.
NTPC is India’s largest energy conglomerate with roots planted way back in 1975 to accelerate power development in India. Since then it has established itself as the dominant power major with presence in the entire value chain of the power generation business. From fossil fuels it has forayed into generating electricity via hydro, nuclear and renewable energy sources. This foray will play a major role in lowering its carbon footprint by reducing greenhouse gas emissions. To strengthen its core business, the corporation has diversified into the fields of consultancy, power trading, training of power professionals, rural electrification, ash utilisation and coal mining as well. NTPC was ranked 431st in the ‘2015, Forbes Global 2000’ ranking of the world’s biggest companies.

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