Sunday, July 26, 2009


Virtually flagging off the government’s disinvestment effort, the empowered group of ministers (eGoM) on Friday met to finalise the price band for NHPC’s initial public offering (IPO), which will happen simultaneously with the disinvestment process. The eGoM has suggested a price band of Rs 30 to Rs 36.

The lead managers for the offer — Enam Securities Private, Kotak Mahindra Capital Company and SBI Capital Markets — had suggested a price band of Rs 25 to Rs 30. The disinvestment by the government will piggyback on the IPO, as was the case with NTPC several years ago. The response to this entry into the capital markets will be closely watched as the government’s future disinvestment plans will be determined by it.

The public sector infrastructure company will issue 10% of its new equity shares in the public offer while the government will divest its 5% stake in the company. NHPC plans to raise Rs 1,670 crore fresh equity through the IPO and plans to bring 167 crore shares of face value of Rs 10 each, which would be offered at a premium to be decided through book-building process.

The group, comprising finance minister Pranab Mukherjee, power minister Sushilkumar Shinde and deputy chairman, Planning Commission, Montek Singh Ahluwalia, were constituted to fix the price band. Proceeds from the NHPC issue are expected to be moved to the National Investment Fund (NIF), since it is unlikely that the Cabinet would have taken a decision on the fate of NIF by the time proceeds from the offer come in.