The government has decided to sell 9.5% in power major NTPC through the offer-for-sale route on February 7, a divestment which has the potential to become the fiscalís largest, raising about R12,000 crore. Post-disinvestment, the governmentís stake will come down to 75%. NTPC went public with an initial public offering (IPO) in 2004.
The government has raised over R10,000 crore from PSU disinvestments this fiscal, including the proceeds of R3,141 crore from the sale of 10% in Oil India last week. As against the budget target of R30,000 crore for this fiscal, disinvestment revenue so far has been over R10,000 crore. Disinvestment secretary Ravi Mathur said last week that PSU stake sales could fetch R27,000 crore, falling short of the target.
Following an empowered group of ministersí meeting chaired by finance minister P Chidambaram on Tuesday, Mathur said the price of NTPC shares for sale will be communicated to stock exchanges on Wednesday. According to sources, the offer price will be at a discount of 5-6% to the market price.
Analysts believe that cash-rich public sector entities like LIC might pick up a significant chunk of NTPC stake on offer, as happened with other major stake sales like ONGC, Hindustan Copper and OIL.
The NTPC stock closed up 0.16% on the BSE on Tuesday while the Sensex fell 0.46%. The divestment department has already conducted international roadshows for the divestment of NTPC.
Last week, the government completed the sale of 10% in Oil India Ltd (OIL) raising over Rs 3,141 crore. In a press statement, the ministry stated the OIL auction was oversubscribed by 2.57 times. The Centre successfully managed to sell over 6.01 crore shares of the state-owned oil explorer at Rs 520 per share. The issue generated a demand for about 15.4 crore shares from domestic institutional investors, FIIs and banks and insurance companies.
The response to the OIL offering gives government a much-needed boost as it looks to launch the NTPC mega-offering which is key to the fiscalís disinvestment target.
Earlier this fiscal, the government raised Rs 6,000 crore by selling stakes in NMDC, Rs 800 crore from HCL and Rs. 125 crore from National Buildings Construction Corporation.
The success of the disinvestment programme for 2012-13 is critical to contain the fiscal deficit. The government aims to bring down its fiscal deficit to 5.3% of GDP by March-end.
The government has also identified other companies including SAIL,MMTC, Neyveli Lignite and Rashtriya Chemicals and Fertilizers as disinvestment candidates for the current fiscal.