In the sixth PSU share sale this fiscal, the government will on Tuesday sell 5 per cent stake in India's largest power producer NTPC Ltd at a floor price of Rs 122 apiece to raise Rs 5,030 crore.
The share sale, which comes days ahead of the Union Budget, will be the first under Sebi's revised offer for sale (OFS) rules that allow the bidding for shares spread over two days.
The government has fixed a floor price for sale of over 41.22 crore shares in NTPC at Rs 122 apiece, a 3.82 per cent discount to its closing price on the BSE.
Shares of NTPC closed at Rs 126.85 on the BSE on Monday.
While the issue would open for institutional bidders tomorrow, the retails investors, for whom 20 per cent shares have been reserved, will get to bid on February 24.
At a floor price of Rs 122, the NTPC share sale would fetch about Rs 5,030 crore to the exchequer.
NTPC is the first company to hit the markets under the revised offer for sale (OFS) guidelines of market regulator Sebi.
In a BSE filing, NTPC said that government will sell over 41.22 crore shares in the company at a floor price of Rs 122 apiece. The bidding would remain open from 0915-1530 hours on both the days.
A 5 per cent additional discount would be offered to retail investors, which are those who bid for shares worth not more than Rs 2 lakh.
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 per cent stake sale in NTPC. The government holds 74.96 per cent in the firm. It had last sold stake in NTPC in February 2013.
NTPC would be the sixth PSU to hit markets in the current fiscal. The disinvestment department has held roadshows in Singapore, Hong Kong, London and in the US.
So far this fiscal, government has raised over Rs 13,300 crore through disinvestment in five PSUs -- EIL, Indian Oil Corp, PFC, REC and Dredging Corporation. This is against a target of Rs 69,500 crore for 2015-16.
Volatile market conditions have affected the government's disinvestment plan, which mostly have commodity and oil stocks in the pipeline.
Under the Sebi's modified OFS rules, allocation shall be at or above the floor price on price priority basis at multiple clearing prices.
However, allocation to retail investors, who have the option to bid at the cut off price, can be below the floor price on account of retail discount offered, it added.
"The non-retail investors who have placed their bids on T day and have chosen to carry forward their bids to T+1 day, shall be allowed to revise their bids on T+1 day as per the Sebi OFS Circulars," NTPC said.
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