India Set to Raise $729 Million From Sale in Biggest Utility

  • Investors bid for more than double the shares offered
  • Retail buyers subscribe for 44 percent of their quota

India is set to raise about 50 billion rupees ($729 million) after investors bid for more than double the 5 percent stake offered in the country’s biggest power generator NTPC Ltd.

Investors subscribed to 843.3 million shares, compared to 412.3 million on sale at a floor price of 122 rupees apiece at the end of the second and final day of the sale, according to stock exchange data. Retail investors bid for 44 percent of their quota on Wednesday with the balance being bought by institutional buyers. The government had reserved 20 percent of the shares for retail buyers.

The sale of shares by the government in NTPC follows similar offerings in Power Finance Corp. and Rural Electrification Corp. in the current financial year ending March 31. Still, India remains short of its 695 billion-rupee stake sale target for the period. Missing the goal will put pressure on the country’s finances at a time when Prime Minister Narendra Modi is seeking to increase capital spending and boost growth.

Institutional investors on Tuesday subscribed to 596.2 million shares of 329.8 million offered. The one-day institutional portion comprised 80 percent of the offer.

The response from institutional buyers indicated their enthusiasm for New Delhi-based NTPC, which works in a regulated market and on an assured-return model. The sale will cut the government’s holding in NTPC to about 70 percent.

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