Govt mops up ~9,100 cr through NTPC share sale

The government has raised ~9,000 crore through a share sale in power utility major NTPC. The investor demand for the offer for sale (OFS) fell short, as the Centre had put on block ~13,800 crore worth of shares.

The OFS saw a total of 548 million bids against 824 million shares on offer, which include the greenshoe portion. The retail portion saw only 73 per cent subscription on Wednesday. Shares of NTPC closed at ~168, also the floor price for the OFS. Retail investors, were offered an additional five per cent discount.

The tepid retail demand was despite brokerages advising their clients to subscribe to the offering. Angel Broking, in a note, said offering was attractive for long-term investors, as it valued the company at 1.2 times its 201819 book value.

On Tuesday, the offering saw participation largely from state-owned institutional investors such as Life Insurance Corporation of India (LIC), while the participation from other institutions, including foreign funds, was low, said bankers.

The government currently owns a 69.74 per cent stake in NTPC. Post OFS, the shareholding of the government would come down to 63.1 per cent.

After this OFS, the total divestment proceeds of the government for the current financial year would touch the ~19,000-crore mark, against its target of ~72,500 crore. Bankers say the Street will witness several divestment issues in the next few months, including the initial public offering (IPO) of General Insurance Corporation (GIC Re) and New India Assurance.