Unlocking Value: Government Initiates 3.5% Stake Sale in NHPC via OFS; Floor Price Fixed at ₹66 per Share


Seizing Opportunities: NHPC OFS Details Unveiled

The government is set to unlock substantial value by divesting a 3.5% stake in the prominent renewable energy player, NHPC Ltd., through a meticulously planned offer-for-sale (OFS) scheduled for January 18 and 19, 2024. Delving into the specifics, the OFS comprises a base size of 2.5%, complemented by a one percent green shoe option. Non-retail investors can actively participate starting January 18, while retail investors get their chance on January 19.

Government’s Strategic Move: NHPC OFS in Focus

The Secretary of the Department of Investment and Public Asset Management (DIPAM), Ministry of Finance, took to ‘X’ to announce, “Offer for sale in NHPC opens tomorrow for non-retail investors. Retail investors can bid on Friday. The government will divest 3.5% equity, including the green shoe option of one percent.”

Inclusivity in Allocation: NHPC’s Reservation Strategy

A noteworthy aspect of this OFS is the allocation reservation, with approximately 10% of the offered shares earmarked for specific allocation. NHPC clarified in a regulatory filing that “Retail investors shall mean an individual investor who places bids for offer shares of total value not exceeding ₹2 lakhs aggregated across stock exchanges.”

Oversubscription Contingency: Potential for Additional Sale

In case of oversubscription, the government has proposed an additional sale of 100,450,348 shares, constituting one percent of the total paid-up capital of NHPC. NHPC outlined the allocation process, stating, “The allocation shall be at or above the floor price on a price priority basis at multiple clearing prices, following the SEBI OFS circular. Retail investors, however, have the option to bid at or above the cut-off price.”

The Offering Details: NHPC Shares on the Block

As part of the OFS, the government plans to offload over 25 crore equity shares in NHPC, with the green shoe option enabling the sale of an additional 10 crore shares. Notably, the floor price of ₹66 per share reflects a discount of 9.66% over NHPC’s closing price on Wednesday. At this floor price, the OFS is poised to generate around ₹2,300 crore for the exchequer.

Market Pulse: NHPC’s Wednesday Performance

On Wednesday, NHPC shares exhibited resilience, closing 0.90% higher at ₹73.06 apiece on the BSE, setting an optimistic tone for the upcoming OFS.

In summary, the NHPC OFS represents a strategic move by the government to unlock value and capitalize on investor interest, offering a unique opportunity for both institutional and retail investors to participate in the growth story of NHPC Ltd.

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