Mumbai: The government will sell an 8.38% stake in iron ore miner NMDC Ltd in a follow-on public offer by the end of March to raise about $3 billion (Rs14,010 crore), based on the firm’s current market value.
NMDC joins a heavy line-up of large public offerings as companies rush to cash in on an 80% rally in the stock market in 2009, raising some concerns over the market’s capacity to absorb the billions of dollars of stocks on offer.
NTPC Ltd and Rural Electrification Corp. Ltd are among those planning to sell more shares in the next few months, and state hydro power firm Satluj Jal Vidyut Nigam Ltd and private-sector firm Jindal Power Ltd are preparing for initial public offerings.
“I feel there should be some time gap between the offers,” said Amit Kasat, senior analyst at Anand Rathi Securities. “But these are good companies, so there should be takers for them. There is a lot of liquidity in the market.”
Indian companies have sold shares worth $19 billion so far in 2009, mostly by property and power sector firms, as capital markets have revived since March.
Since August, the government has raised $1.8 billion by selling shares in NHPC Ltd and Oil India Ltd.
The public offer for NMDC, which the market values at $35.3 billion, could raise as much as $2.96 billion for the government, and would bring its public float in the firm to 10%. The government currently owns at least 98% in the firm.
“If the stock is good, valuation is reasonable, the market will absorb it,” said Giriraj Daga, analyst at Khandawala Securities.
India aims to sell shares of about 60 state-run firms in the coming years, as the government races to raise funds for speedier reforms and to cover a widening fiscal deficit.