The government on Monday approved part sale of its stake in power producing companies NTPC Ltd and Satluj Jal Vidyut Nigam Ltd (SJVN), marking the first steps to restarting its disinvestment programme and selling off equity in state-owned firms.
The Cabinet Committee on Economic Affairs (CCEA) okayed the proposal to sell a 5 per cent stake sale in NTPC and 10 per cent in SJVN, Commerce and Industries minister Anand Sharma told reporters.
NTPC, India's largest power producer, has a market capitalisation of Rs 177,350 crore (Rs 1,773 billion or $37 billion). At the current market price of Rs 213.90 rupees a share, the proposed stake sale would fetch the government about Rs 8,800 crore (Rs 88 billion or $1.9 billion).
After 5 per cent stake dilution, the government's holding in NTPC would come down to 84.5 per cent from the current 89.5 per cent.
“This will help investors as the public float (number of tradeable shares) will go up,” NTPC chairman and managing director (CMD) R.S. Sharma told Hindustan Times.
“It (disinvestment) was a long awaited move,” SJVN CMD H.K. Sharma told HT. “The department of disinvestment will decide on the price band.”
The central government holds 75 per cent of its Rs 4,101 crore equity in SJVN, with the balance being held by the Himachal Pradesh government.
According to experts, its pricing will be benchmarked at a valuation that is likely to be lower than NHPC’s.