The governments FY14 disinvestment drive got a boost on Thursday, with the buyback plan of National Hydroelectric Power Corporation (NHPC) subscribed more than one time. The 10-day buyback programme opened on November 29 and closed on Thursday.
Sources say a majority of shares were tendered by the government. The Centre is believed to have raised about Rs 2,100 crore through the offer. However the exact quantum of shares or the amount raised by the government could not be ascertained. NHPC had offered to buy a little over 123 crore shares via the tender route which allows the promoter or promoter group (government in this case) to participate in the offer. The buyback price was fixed at R19.25 per share, thus, valuing the deal at R2,368 crore.
Apart from the government, foreign institutional investors (FIIs), non-resident Indians (NRIs) and retail investors also participated in the buyback. Sources said Life Insurance Corporation (LIC) also participated in the offer, however the information could not be independently verified.
Sources said the government was allowed to tender the maximum quantity of shares in the offer as mentioned in the red herring prospectus. According to the prospectus: Shareholders to whom the offer was made, were free to tender shares to the extent of their buy back entitlement, in whole or in part or in excess of their buyback entitlement subject to a maximum of their full holding, as on the record date.
Earlier, the government had planned to sell 11.36% stake in the hydel power company via an offer for sale (OFS), but in the light of weak market conditions and lack of appetite for equity issuances, merchant bankers recommended the government opt for a share buy back in the case of companies with high cash balances.
NHPC had more than R5,000 crore in cash and cash equivalents as on quarter ending September 30, 2013. In addition, the company raised more than R1,000 crore via tax-free bond issue in the second week of October. Based on the estimates of shares tendered, the governments shareholding in the company is likely to fall to about 85% after the buy back. At present, the government holds about 86.36% stake in the company.
NHPC shares ended at R18.25, up R0.20 or 1.1%, but remained at a 5.2% discount to the buy back price.