Government to Sell 3.5% Stake in NHPC through OFS

The government has announced its plans to divest a 3.5% stake in NHPC Ltd, a major player in the renewable energy sector, through an offer-for-sale (OFS) that will take place on January 18 and 19, 2024. The OFS includes a base size of 2.5% and a green shoe option of one percent. The sale will be open for non-retail investors on January 18 and for retail investors on January 19.

The Secretary of the Department of Investment and Public Asset Management (DIPAM), under the Ministry of Finance, made the announcement on ‘X’, stating, ‘Non-retail investors can participate in the NHPC OFS starting tomorrow. Retail investors can bid on Friday. The government aims to divest 3.5% equity, including a green shoe option of one percent.’

According to NHPC, retail investors will be defined as individual investors who place bids for NHPC shares totaling not more than ₹2 lakhs across stock exchanges. Approximately 10% of the offered shares will be reserved for allocation.

In case of oversubscription, the government has plans to sell an additional 100,450,348 shares, representing one percent of the total paid-up capital of the company. NHPC’s exchange filing states that the allocation of shares will be at or above the floor price on price priority basis at multiple clearing prices, in accordance with the SEBI OFS circular. However, retail investors will have the option to bid at or above the cut-off price.

The OFS by the government will involve the sale of over 25 crore equity shares in NHPC, with the potential of an extra 10 crore shares through the green shoe option. At a floor price of ₹66 per share, which is a 9.66% discount from Wednesday’s closing price, it is estimated that the OFS will generate around ₹2,300 crore for the government.

On Wednesday, NHPC shares closed at ₹73.06 on the Stock Exchange.