Following Rs. 22,500 crore OFS in Coal India in 2014-15 and Rs. 15,200 crore IPO in 2010, the government will now conduct its third-biggest disinvestment deal.
The center plans to sell around 10% of power utility NTPC for Rs. 13,800 crore. The two-day OFS will kick-start with 412 million shares i.e. 5% stake along with a greenshoe option to sell 5% more.
What's the deal?
NTPC has a market capitalization of nearly Rs. 1.43 lakh crore, making it the fourth-largest public sector undertaking (PSU) after Oil and Natural Gas Corporation, State Bank of India, and Coal India.
The Centre owns 69.7% stake in the firm, which is expected to come down to 59.7% after this stake sale.
What's the situation?
For the OFS, base price has been fixed at Rs. 168 per share. Retail investors will get a 5% discount on the allotment price.
Since Insurance Regulatory Development Authority of India's rules prohibits an insurance company from owning more than 15% stake in a firm, the participation of Life Insurance Corporation will be limited. It owns 11.7% of NTPC.
How's the divestment going?
This NTPC OFS will be crucial for the government to achieve its ambitious divestment target. Out of Rs. 72,500 crore, only Rs. 9,302 crore has been garnered, so far.
Share sales of Housing and Urban Development Corporation and Cochin Shipyard have garnered Rs. 1,207 and Rs. 470 crore, respectively.
Rs. 4,153 crore has been raked via stake sale of Larsen & Toubro-owned through Suuti.