The government, which now holds 74.96 percent stake in the power utility, will sell more than 412 million shares that is expected to fetch the exchequer around Rs.5,030 crore. On Tuesday, the first day of the offer, the part of the issue reserved for institutional players was subscribed 1.8 times, generating a demand for about 59.6 crore shares.
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Bidding would go on till 3.30 pm today and is open only for retail investors.
NTPC Ltd is now trading at Rs. 119.95, down by Rs. 3.95 or 3.19% from its previous closing of Rs. 123.9 on the BSE.
“The floor price for the offer shall be Rs 122 per equity share”, NTPC said in a regulatory filing.
On the first day of the two-day offer for sale (OFS), institutional buyers, who were offered over 32.98 crore out of more than 41.22 crore shares, bid above the floor price of Rs 122 apiece.
“While the market is volatile, for companies like NTPC, it is not hard to get money”, said one of the bankers cited above.
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.
Out of the total offering, about 20 per cent is reserved for retail investors who will be allotted shares at 5 per cent discount to cut-off price. In the budget for the current fiscal presented in February 2015, the government had set a divestment target of Rs 69,500 crore.
Power sector lender REC’s stake sale on April 8 a year ago, saw the markets rising by over 190 points and Rashtriya Chemicals and Fertilizers OFS on March 8, 2013, witnessed the index gaining 270 points. “We expect the government to maintain its majority stake in the company even after the sale of the 5 percent stake which, as such, does not affect our assessment of sovereign support for NTPC”, says Abhishek Tyagi, a Moody’s Vice President and Senior Analyst.
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The Sensex has plunged over 15 per cent this fiscal on various global factors including slowdown in the USA and China as well as uncertainties in the euro zone.
