NTPC disinvestment: Offer subscribed 1.7 times, company rakes in Rs 11,430 crore

MUMBAI: The government hit its disinvestment target on Thursday, with investors such as state-owned insurer Life Insurance Corporation (LIC), a string of local mutual funds and offshore portfolio managers putting in Rs 11,430 crore to buy shares of NTPC, the country’s largest power producer.


The offer for sale by the government was subscribed 1.7 times as investors bid for 133 crore shares as against the 78.32 crore on offer. It was the third-biggest equity offering on Dalal Street after Coal India and Reliance Power.

Foreign funds such as the Government of Singapore Investment Corporation, HSBC Halbis, Invesco, Janus and Eastspring Investment bought shares while local institutions that put in bids included LIC, Reliance Mutual Fund, ICICI Prudential, SBI MF and Birla MF. “LIC has put in a good amount, about Rs 3,000 crore.

Since it had invested through several brokers, the exact number is not yet available. But there were other investors even before LIC stepped in… That the share offer was priced at a 3.5% discount to the Wednesday’s closing price also helped,” said the person.

Disinvestment Secretary Ravi Mathur said the government was satisfied with the response to the NTPC offer. He confirmed there was good participation from foreign institutional investors (FII). “One FII had bid for 1,000 crore shares in early hours of trade. More order inflows came in towards the end of the day. Individually, FIIs have put in $50-100 million,” he said.

At an indicative price of Rs 145.91, the government is likely to mobilise around Rs 11,430 crore from the share sale. Investors whose bids are higher than this price will receive more shares, which will be allotted on a pro-rata basis. Investors with bids below the price will not receive any shares.

Indicative price is the volume-weighted average price of all confirmed bids. The government had set the floor price for the offer at Rs 145 apiece. NTPC shares ended at Rs 148.15 on Thursday, down 2.72% over the previous closing.

Bids for over 43.49 crore shares were received with 100% margin (where investors paid up the full amount) while bids for 40.56 crore shares were received with zero margin. Although the indicative price arrived at was Rs 145.91, the allotment will be done on a price-priority basis, said a banker.

Capital market regulator Sebi had recently modified the guidelines for offer for sale (OFS), under which institutional investors who do not pay any upfront margin cannot lower or cancel their bids but can raise it. However, those who pay 100% margin can modify and cancel bids till the last minute. Sebi has also made it mandatory to disclose the indicative price of an offer throughout the trading session.

NTPC was the fifth disinvestment candidate in the current fiscal during which the government has raised nearly Rs 21,825 crore by selling shares of state-owned undertakings as against its target of Rs 30,000 crore. The four other offerings were from NMDC (Rs 5,828 crore), Hindustan Copper (Rs 1,375 crore), National Buildings Construction Corporation (Rs 125 crore) and Oil India (Rs 3,065 crore).