Background
The government of India has initiated a stake sale plan for the state-owned power producer NHPC Ltd, which operates 24 hydroelectric power stations across the country. The government currently holds 70.95% stake in NHPC, and aims to divest a 3.5% stake through an Offer for Sale (OFS) at ₹66 per share.
Details
The OFS includes a base size of 2.5%, with an additional 1% offered through the Green Shoe option. The offering is scheduled to open for non-retail investors on January 18, followed by the retail investor segment on January 19. The floor price of ₹66 per share is at a discount of 9.66% over Wednesday’s closing price of NHPC shares. At the floor price, the OFS would fetch about ₹2,300 crore to the exchequer.
Implications
The stake sale is part of the government’s disinvestment target of ₹1.75 lakh crore for the fiscal year 2024-25. The government has so far raised ₹1,100 crore from disinvestment proceeds this fiscal. The stake sale is also expected to improve the public shareholding and market liquidity of NHPC, which is one of the largest hydropower companies in Asia.