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APR 28 2016

NHPC offer for sale gets good response from LIC, DIIs

  • Economic Times, ET Bureau / Hyderabad
  • Created: Thu 28th APR 2016

The offer for sale (OFS) by NHPC on Wednesday saw a reasonably good response with state-owned life insurance giant Life Insurance Corporation (LIC) having put in a chunky bid, according to people familiar with the development, reports fe Bureau in Mumbai.

 The OFS saw a subscription of over 1.5 times with bids coming in for 156 crore shares against the 100 crore shares on offer. The majority of bids received were from domestic institutions, sources said. The government proposes to sell 125 crore shares in all or 11.6% of the power generator.

 The offer, which was bid for 1.56 times, was open to only institutional investors and high net worth individuals on Wednesday; retail investors will participate in the issue on Thursday. If all the shares are sold, the OFS will fetch the exchequer R2,700 crore.

 The government currently holds a nearly 86% stake in NHPC, which will come down to 74.6% after the issue.

 Analysts pointed out the stock was being bought more as a dividend play rather than for capital appreciation — the dividend payout ratio in FY15 was 24.5%.

 The NHPC stock on Wednesday closed at `21.55 or a shade lower than the OFS floor price of `21.75. The announced floor price was at a 5.6% discount to NHPC’s closing on Tuesday of `23.05. According to data from stock exchanges, NHPC has touched a high of `24.40 and a low of `15.55 in the last 52 weeks.

 NHPC’s OFS is the first disinvestment in FY17. The government has budgeted for of `56,500 crore from disinvestments in the current financial year.

 In February, the government sold a 5% stake in power producer NTPC and in March it offloaded a 5% stake in logistics player Concor. LIC had subscribed to nearly 41% of NTPC’s OFS.

 Edelweiss Securities, HSBC Securities and Capital Markets and IDFC Securities are the lead bankers for the NHPC OFS. The government is considering the sale of a 10% stake in Oil India, the state-run oil explorer.

 

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