State-run NHPC, which recently completed a R2,000-crore share buyback from the government, will hit the market with another follow-on public offer of around 10% in the last fortnight of March 2014. This would give some solace to the government staring at a likely shortfall in disinvestment proceeds, budgeted at R40,000 crore for FY14.
The FPO would fetch the government close to R2,000 crore at the current NHPC stock price. The NHPC scrip closed 0.86% higher at R18.15 on the BSE on Wednesday.
The regulatory cooling-off period of 12 weeks for another market offering will be over by mid-March. “The buyback programme’s timing was in keeping with a possible FPO in March. The department of disinvestment (DoD) would, however, have to take a final call on the basis of market conditions prevailing then,” said NHPC director finance ABL Srivastava.
Sources said, most likely, the government would opt for the offer-for-sale route for the proposed FPO.
The government earlier included NHPC among the list of companies for disinvestment under the market offer route. It was decided that the company would sell equity – equivalent to 11.36% of the paid-up capital – through the FPO. The company also appointed merchant bankers for the offer, but the programme was scrapped in the light of choppy market conditions.
“We can still go in for divestment of 11.36% government stake in the company at a later date. But a decision on the exact quantum would be taken later,” said a government official privy to the development.
Prior to the buyback, the government stake in NHPC stood at 86.36% and has now fallen to 85% (the funds are to reach the government coffers soon). After a 10% FPO, government holding in the company would fall further to about 76%, and if the 11.36% stake sale goes through, it would fall further to 75%. The paid-up equity capital of the company stood at Rs 12,300 crore prior to buyback and is now Rs 11,000 crore.
The government is exploring all options to mobilise its targeted disinvestment proceeds for the current fiscal as FPOs of several companies have been delayed. So far, the government has mobilised a mere Rs 1,326 crore as disinvestment proceeds from sale of shares in a few small PSUs.
It recently concluded the FPO of Power Grid Corporation and the buyback programme of NHPC. Now, the focus is on mobilising resources through buyback and special dividend from other PSUs such as BHEL, NMDC and Coal India. Market offering is also proposed for companies such as Indian Oil Corporation, Engineers India and Hindustan Aeronautics, while the sale of the government’s residual share is also proposed in case of HZL and Balco.