In The Bleak Market, NTPC OFS Oversubscribed 1.8 Times

In a bleak and depressing market, it is really a daring that government has done in going out with PSU power generator NTPC’s disinvestment and interestingly it has paid well to the government. The OFS for 5 per cent paid up capital of the company for more than 41.22 core share with face value of 10 has got a decent response from the institutional investors and got oversubscribed 1.8 times, importantly on a day when Sensex declined by whooping 1.59 per cent.

Interestingly this OFS came as per the new rules of SEBI regarding OFS, wherein non retail investors will place their bid on a day before the retail investors, so that they will get fair amount clarity about the bid. As per the new SEBI guidelines only non retail investors were allowed to place their bids on T Day for 80 per cent of unreserved portion and retail investors shall bid on T+1 day for 20 per cent of the portion reserved for them and they will have the option to place a price bid or opt for bidding at cut off price. New arrangement provides retail investors the benefit of discovering the cut off price of T day and place their bids on T+1 day on a more informed basis than was the case earlier.

Also retail investors are also entitled to 5 per cent discount and discount will be applicable to bids received on T+1. Under the new norm if there is any unsubscribed portion of the shares reserved for retail investors, it will be allocated to non retail bidders on T+1 day at a price equal to cut off price or higher as per bids. For this option will be provided to non retail bidders to indicate their willingness to carry forward their bids to T+1 day. Considering this bidding for the OFS will remain open for two days. Best part for the issue was that the OFS got decent participation from FIIs and they have parked Rs.925.45 crore to the issues which is 22.96%

After day one NTPC got total subscription of Rs.7287.57 crore and after this OFS government shareholding in NTPC will come down to 69.96 per cent. Importantly indicative price was Rs 122.22 which is above the floor price as the previous day closing price was Rs. 126.85 (BSE)/ Rs. 127 (NSE) and floor price was fixed at Rs. 122.