Govt gets Rs 5,000 crore from NTPC OFS; retail investors disappoint

New Delhi: Government Wednesday raised about Rs 5,030 crore from sale of its 5 percent stake in NTPC, with insurance companies getting almost two-third shares but retail participation was lukewarm amid a free-fall of stock markets.

The public issue of 41.22 crore equity shares was mostly lapped up by FIIs, insurance companies, mutual funds and HNIs, all of which came on the first day of the offer of sale (OFS) yesterday.

While institutional investors bid for nearly twice the number of shares offered to them, the 700 point drop in benchmark Sensex over two days seemed to have taken its toll on retailers who put in bids for less than half of their quota.

 

The excess bids of institutional bidding was used to make good the shortfall in retailer flow, giving the government about Rs 5,030 crore from the share sale, the sixth this fiscal.

Disinvestment Secretary Neeraj K Gupta said the retail portion too would have been over-subscribed had the broader markets been stable.

About 63 percent of the shares sold were allocated to insurance companies, led by state-run LIC. Retail investors, who were reserved 20 percent of the issue size, got 8.5 percent of the shares.

FIIs were allocated 18 percent or about one-fifth of the shares sold and mutual funds got 8.5 percent. High Networth Individuals (HNIs) managed 2 percent of the shares allocated.

"FIIs have been very aggressive in their bidding, both in terms of price and quantity," Gupta told PTI here.

Government had offered 41.22 crore shares in NTPC through the two-day Offer for Sale (OFS) route at a floor price of Rs 122 apiece. NTPC scrip fell below the floor or minimum price today to close at Rs 118.70 on the BSE.

"Despite 700 points plunge, investor interest was alive with retail investors coming in at an effective price of Rs 116," Gupta said.

Retail investors today bid for only about 3.63 crore shares out of 8.24 crore reserved for them. Yesterday, institutional investors had bid 1.8 times the offer size of 32.98 crore shares.

Retail investors were also given a 5 percent discount to the floor price.

"Cut off price with respect to non retail category of NTPC has been fixed at Rs 122.05," stock exchange data said.

Following broader market trends, the NTPC scrip dipped 4.20 percent over previous close to Rs 118.70 on the BSE. The BSE Sensex too lost 321 points or 1.37 percent to close at 23,088. Yesterday, the Sensex had plunged 379 points. 

With NTPC disinvestment, government's share sale kitty

inched up to over Rs 18,330 crore. It had earlier divested stake in five PSUs - EIL, Indian Oil Corp, PFC, REC and Dredging Corporation.

The disinvestment department has been set a target of Rs 69,500 crore for full 2015-16 ending March 2016.

NTPC share sale, the sixth disinvestment of current fiscal, is the first under Sebi's revised OFS rules that allow the bidding for shares spread over two days.

After the sale, the government will continue to hold a majority stake of 69.96 percent in NTPC.

Institutional investors, including FIIs and insurance companies, had yesterday put in bids worth Rs 7,287 crore worth of shares, against Rs 4,000 crore reserved for them.

SBICAP Securities, ICICI Securities, Edelweiss Securities and Deutsche Equities are acting as merchant bankers for the share sale.

The Cabinet in May had approved the 5 percent stake sale in NTPC. The government holds 74.96 percent in the firm. It had last sold stake in NTPC in February 2013.