The government will sell 5% stake in India’s largest power producer, NTPC, on Tuesday at a floor price of Rs 122 per share to raise Rs 5,029 crore.
The stake sale would be spread over two days, with institutional bidders getting the first chance to buy shares on Tuesday. Retail investors, for whom 20% shares have been reserved, will get to bid on Wednesday.
The floor price of Rs 122 apiece is a 3.82% discount on Monday’s closing price of Rs 126.85.
Retail investors will get an additional discount of 5%.
NTPC is the first company to hit the markets under the revised offer for sale (OFS) guidelines issued by the Securities and Exchange Board of India (Sebi).
According to the market regulator, apart from promoters, non-promoter entities holding more than 10% of the shareholding can also offload stake through an OFS. However, no fresh issue of capital can go to fund the company’s expansion projects.
The Cabinet had in May approved the 5% stake sale in NTPC. The Centre, which holds 74.96% in NTPC, last sold its stake in the company in February 2013.
NTPC would be the sixth PSU to hit the market in 2015-16. The disinvestment department has held roadshows in Singapore, Hong Kong, London and the US.
The government has raised over Rs 13,300 crore through disinvestment in five PSUs — Engineers India Ltd (EIL), Indian Oil Corp, Power Finance Corp (PFC), Rural Electrification Corp (REC) and Dredging Corporation — so far in 2015-16 against theRs 69,500 crore target.
Volatile market conditions have affected the government’s sell-off plans, with the Sensex having lost over 15% so far in 2015-16 on various global factors, including slowdown in the US and China.