The government's divestment of 5 percent stake in power generator NTPC began in splendid fashion on Tuesday with the institutional investors portion getting oversubscribed within two hours of the opening of trade.
Bidding for the 20 percent shares reserved for retail investors would open on Wednesday.
Of the over 32. 98 crore shares on offer for institutional investors, bids for over 38. 92 crore shares, or 1. 18 times the shares on offer, came in during the first two hours of trade.
The base price for the NTPC offer for sale (OFS) has been fixed at Rs. 122 per share. The government, which currently holds 74. 96 percent stake in the power utility, will sell more than 412 million shares that is expected to fetch the exchequer around Rs. 5, 030 crore.
SBI Cap Securities, ICICI Securities, Edelweiss Securities and Deutsche Equities are the bankers to the share sale.
The government has ivested stake in five companies, raising a total of Rs. 13, 300 crore so far in this fiscal, while this sale will be the second biggest divestment after Indian Oil Corp, which garnered the exchequer around Rs. 9, 370 crore. It has a divestment target of Rs. 69, 500 crore for 2015 - 16.
Moody's Investors Service said on Tuesday that the NTPC stake sale will not impact the rating of India's biggest power producer.
Moody's has a 'Baa3' rating on NTPC with a positive outlook.
NTPC's rating remains supported by its strategic importance to the Indian economy, given its position as the country's largest power generation company, Moody's said in a statement.
"We expect the government to maintain its majority stake in the company even after the sale of 5 percent stake which, as such, does not affect our assessment of sovereign support for NTPC, " said Moody's vice president Abhishek Tyagi.
NTPC stock closed on Tuesday at Rs. 123. 90 a share, down 2. 95 points, or 2. 33 percent, on its previous close on the Bombay Stock Exchange (BSE).