Government to auction NTPC shares tomorrow

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Floor price likely to be at a discount to current close

An Empowered Group of Ministers (EGoM) has cleared the way for divesting Government’s stake in NTPC. The process will take place on Thursday, February 7.

The Government will use ‘offer-for-sale through stock exchange’ better known as auction method. Although the EGoM approved the floor price, the Disinvestment Secretary, Ravi Mathur, said: “The floor price will be intimated to the stock exchanges on Wednesday.”

NTPC is the fourth public sector undertaking, after Hindustan Copper, NMDC and Oil India, where auction method will be used for disinvestment during current fiscal.

Rs 12,000 cr likely

The Government aims to offload 9.5 per cent out of its 84.5 per cent shareholding. It is believed that the floor price will be at 5 per cent discount on the average current market price. It is expected that current round of sell-off will fetch Rs 12,000 crore. The power major’s share closed almost flat at Rs 155.60 (BSE’s closing price) on Tuesday.

NTPC is one of the seven ‘maharatna’ category PSU. Earlier, in February, 2010, the Government had divested 5 per cent stake in the power major to get Rs 8,480 crore. But it got poor response. Although, the issue was subscribed a little over one time, the retail portion of the issue got a paltry 0.14 time subscription.

Even employees were not very much enthused by the issue, as their portion was just 0.43 time subscribed.

The current market price of NTPC is less than the issue price of 2010 offer. According to information available on the Web site of Department of Disinvestment, at the last offer, the institutional investors were allotted share at the rate of Rs 202, high net worth individuals along with retail investors at Rs 201, and employees were allotted at the rate of Rs 191.

With sell-off in NTPC, total proceed from disinvestment in the current fiscal may touch Rs 22,000 crore. The Government has targeted to raise Rs 30,000 crore through disinvestment. It is hopeful of meeting the target as it has already approved the disinvestment in eight more companies. It is expected that after NTPC, the Government will try to offload its shares at least in SAIL and MMTC in remaining 55 days of the current fiscal.

(This article was published on February 5, 2013)
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