NHPC OFS: Retail Investors Set to Embrace Government’s 3.5% Stake Sale Opportunity

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In a bid to boost investor participation, the government unveils NHPC OFS, inviting retail investors to seize a 3.5% stake in the renewable energy major at a discounted floor price.

New Delhi, January 20, 2024 – In a strategic move towards divestment, the Indian government has announced its intention to sell a 3.5% stake in NHPC Ltd, a prominent player in the renewable energy sector. The Offer-for-Sale (OFS) is scheduled for January 18 and 19, 2024, with a base size of 2.5% and an additional one percent option, known as the green shoe.

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Non-retail investors will have the opportunity to participate in the OFS on January 18, while retail investors can engage in the bidding process on January 19. The Secretary of the Department of Investment and Public Asset Management (DIPAM), Ministry of Finance, confirmed the offering via a post on ‘X’, stating, “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.”

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NHPC, in a regulatory filing, clarified that around 10% of the offer shares will be reserved for allocation. Retail investors, defined as individuals bidding for offer shares not exceeding ₹2 lakhs across stock exchanges, will be included in the allocation process.

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In the event of oversubscription, the government plans to sell an additional 100,450,348 shares, equivalent to one percent of the total paid-up capital of NHPC. The allocation process will adhere to the floor price on a price priority basis at multiple clearing prices, as per SEBI OFS circular guidelines, with an exception for retail investors who can bid at or above the cut-off price.

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As part of the OFS, the government aims to offload over 25 crore equity shares in NHPC, with the green shoe option allowing for an additional 10 crore shares. The floor price of ₹66 per share represents a discount of 9.66% compared to NHPC’s closing price of ₹73.06 per share on Wednesday. If the OFS is executed at the floor price, it is expected to generate approximately ₹2,300 crore for the government’s coffers.

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On Wednesday, NHPC shares closed 0.90% higher at ₹73.06 apiece on the BSE, reflecting investor confidence in the company’s prospects amid the ongoing government stake sale.

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