NTPC shares lapped up by institutional investors

February 25, 2016

Institutional investors oversubscribed : NTPC Shares

[dropcap color=”#008040″ boxed=”yes” boxed_radius=”8px” class=”” id=””]I[/dropcap]n an overwhelming response, Institutional Investors portion oversubscribed within two hours of its opening for the government’s 5% divestment stake in power generator company NTPC on Tuesday.

About 32.98 crore shares are on offer for institutional investors, bids for over 38.92 crore shares came in during first two hours of trade or the issue was oversubscribed within two hours by 1.18 times the shares on offer.
20% shares are reserved for retail investors and bidding would open on Wednesday.

The base price for the NTPC offer for sale (OFS) has been fixed at Rs.122 ($1.78) per share. The government, which currently holds 74.96 percent stake in the power utility, will sell more than 412 million shares that is expected to fetch the exchequer around Rs.5,030 crore ($732.92 Million).

SBI Cap Securities, ICICI Securities, Edelweiss Securities and Deutsche Equities are the bankers to the share sale.

[dropcap color=”#008040″ boxed=”yes” boxed_radius=”8px” class=”” id=””]T[/dropcap]he government has ivested stake in five companies, raising a total of Rs.13,300 crore ($1937.92 Million) so far in this fiscal, while this sale will be the second biggest divestment after Indian Oil Corp, which garnered the exchequer around Rs.9,370 crore ($1365.29 Million). It has a divestment target of Rs.69,500 crore ($10126.76 Million) for 2015-16.

Moody’s Investors Service said on Tuesday that the NTPC stake sale will not impact the rating of India’s biggest power producer.

Moody’s has a ‘Baa3’ rating on NTPC with a positive outlook.

NTPC’s rating remains supported by its strategic importance to the Indian economy, given its position as the country’s largest power generation company, Moody’s said in a statement.

“We expect the government to maintain its majority stake in the company even after the sale of 5 percent stake which, as such, does not affect our assessment of sovereign support for NTPC,” said Moody’s vice president Abhishek Tyagi.