Indian Government to Sell 3.5% Stake in NHPC through Offer for Sale
The Indian government has announced plans to divest a 3.5% stake in the state-run National Hydroelectric Power Corporation (NHPC.NS) through an Offer for Sale (OFS), according to an exchange filing on Wednesday.
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Key Details:
- Stake Sale Details:
- The proposed sale involves divesting 2.5% of NHPC’s stock, with an option to sell an additional 1%.
- The floor price for the sale is set at 66 rupees per share, representing nearly a 10% discount from the stock’s closing price on Wednesday.
- Financial Implications:
- The government aims to raise about 23.2 billion Indian rupees (approximately $279.04 million) through this stake sale.
- This move is part of a broader divestment strategy to generate funds.
- Divestment Targets and Challenges:
- The Indian government has raised around 100.5 billion rupees through stake sales in the current financial year.
- However, this is only a fifth of its ambitious target of 510 billion rupees for the fiscal year 2023-24.
- Reuters reported in November that the government is likely to miss its divestment target for the fifth consecutive year.
- OFS Schedule:
- The OFS for NHPC is set to take place on January 18 and 19, 2024.
- Non-retail investors can participate on January 18, while retail investors can bid on January 19.
- Government Official’s Statement:
- The Secretary of the Department of Investment and Public Asset Management (DIPAM), Ministry of Finance, confirmed the OFS details.
- In a statement, he mentioned, “Offer for sale in NHPC opens tomorrow for non-retail investors. Retail investors can bid on Friday. The government will divest 3.5 per cent equity including the green shoe option of one per cent.”
- Allocation and Oversubscription:
- Around 10% of the offer shares will be reserved for allocation.
- In case of oversubscription, the government may sell an additional 1% of the total paid-up capital of the company.
- Financial Impact and Share Price:
- The floor price of ₹66 a share is at a discount of 9.66% over Wednesday’s closing price.
- At the floor price, the OFS is estimated to fetch about ₹2,300 crore to the exchequer.
- Market Response:
- NHPC shares settled 0.90% higher at ₹73.06 apiece on the BSE on Wednesday.
#JustIn| Government to sell 3.5% stake in #NHPC at ₹66/share via offer for sale (OFS) on January 18 & 19, 2024 pic.twitter.com/I3mEBhi60X
— CNBC-TV18 (@CNBCTV18Live) January 17, 2024
FAQs:
1. What is NHPC?
NHPC, or National Hydroelectric Power Corporation, is a state-run entity in India that specializes in renewable energy, particularly hydroelectric power.
2. What is an Offer for Sale (OFS)?
An Offer for Sale (OFS) is a method used by the government to divest its stake in a publicly listed company. In this case, the Indian government is selling a portion of its stake in NHPC.
3. How much stake is the government selling in NHPC?
The government is planning to sell a 3.5% stake in NHPC. This includes divesting 2.5% of the stock with an option to sell an additional 1%.
4. What is the floor price for the sale?
The floor price for the NHPC stake sale has been set at 66 rupees per share. This is nearly a 10% discount from the closing price of NHPC shares on the day preceding the announcement.
5. When is the Offer for Sale taking place?
The NHPC Offer for Sale is scheduled to happen on January 18 and 19, 2024. Non-retail investors can participate on January 18, while retail investors can bid on January 19.
6. How much does the government aim to raise through this stake sale?
The government aims to raise about 23.2 billion Indian rupees (approximately $279.04 million) through the NHPC stake sale.
7. What is the purpose of the stake sale?
This stake sale is part of the Indian government’s broader divestment strategy. The funds generated from such sales contribute to the government’s finances and investment in other areas.
8. Has the government met its divestment targets?
No, as of the current financial year, the government has raised around 100.5 billion rupees through stake sales. This represents only a fifth of its ambitious target of 510 billion rupees for the fiscal year 2023-24.
9. What happens in case of oversubscription?
If the demand for shares exceeds what is available (oversubscription), the government may sell an additional 1% of the total paid-up capital of NHPC.
10. How did the market respond to the announcement?
On the day of the announcement, NHPC shares settled 0.90% higher at ₹73.06 apiece on the Bombay Stock Exchange (BSE).
Note: The information provided is based on the latest available data and may be subject to updates. Investors and stakeholders are encouraged to refer to official announcements and regulatory filings for the most accurate and current details.
