Disinvestment to return piggyback on NHPC IPO

Disinvestment to return piggyback on NHPC IPO
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First Published: Fri, Apr 06 2007. 12 28 AM IST
Updated: Fri, Apr 06 2007. 12 28 AM IST
The United Progressive Alliance (UPA) government is hoping to revive the process of disinvesting its stake in public sector enterprises when it sell 5% of its holding in National Hydroelectric Power Corp. (NHPC). The disinvestment will be clubbed with the company’s proposed initial public offer in June.
In all, nearly 167 crore shares will be offered to the public. After this, the government’s equity in NHPC would be diluted to 86.30%. NHPC has a paid-up capital of Rs10,600 crore, and going by face value, the IPO and the disinvestment would help raise at least Rs1,590 crore. It has an authorized share capital of Rs15,000 crore.
While proceeds from the IPO would be used by the company to part-finance upcoming projects, such as Subansiri Lower in Assam, Uri-II, Chutak and Nimoo-Bazgo in Jammu and Kashmir and Chamerra-III in Himachal Pradesh, the government would keep the proceeds from the sell-off of its 5% share.
The UPA regime had halted the disinvestment process after intense pressure from allies such as the Left parties and the Dravida Munnetra Kazhagam (DMK).
The southern ally had vehemently opposed a proposal to divest stake in Neyveli Lignite Corporation last year.
The last time a PSU disinvestment took place was in 2004, when the government had piggybacked an IPO by the National Thermal Power Corp. to divest its stake in the power utility. Besides this, government’s stake was sold in car maker Maruti Udyog Ltd.
NHPC has filed a draft prospectus with market regulator Securities and Exchange Board of India for its public offer. It has appointed Enam Financial Consultants Pvt. Ltd,Kotak Mahindra Capital Company and SBI Capital Market Ltd as lead managers to the issue. The company proposes to list its shares on both the National Stock Exchange and the Bombay Stock Exchange.
NHPC had announced a net profit of over Rs742 crore on a turnover of Rs1,714 crore in 2005-06. The financial performance for 2006-07 is yet to be announced.
Incorporated in 1975, NHPC has developed and constructed nine power stations and has a total installed capacity of 2,755 megawatts (MW).
It has also constructed, operates and part-owns (51%) a 1,000MW power station in the Narmada Hydroelectric Development Corporation.
At present, NHPC is engaged in the construction of 12 hydroelectric projects in the states of Jammu and Kashmir, Himachal Pradesh, Arunachal Pradesh/Assam, Sikkim and West Bengal that is expected to increase the total installed capacity by 5,192 MW.
Besides, the corporation is awaiting government approval for various projects, with many at different stages of getting clearance, sources said.
Officials at the hydroelectric power utility declined to comment when asked for estimates of how much money they were expecting to raise through the initial public offer.
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First Published: Fri, Apr 06 2007. 12 28 AM IST