Govt eyes ₹4,600 cr from NHPC OFS as it gets subscribed 3.47 times on Day 1; exercises full greenshoe option
Govt eyes ₹4,600 cr from NHPC OFS as it gets subscribed 3.47 times on Day 1; exercises full greenshoe option
Govt eyes 4 600 cr - India's government has achieved a significant milestone in its disinvestment efforts, as the Offer for Sale (OFS) in National Hydroelectric Power Corporation (NHPC) Ltd saw overwhelming investor interest on the first day of bidding. The shares were oversubscribed by 3.47 times, allowing the Centre to fully utilize the greenshoe option, which increased the total stake sale to 6% of NHPC’s equity. This move follows a strategic announcement on Monday, where the government outlined a base offering of 3% equity in the hydropower company and reserved an additional 3% for the greenshoe option in case of oversubscription.
Strong Investor Response and Pricing Details
The OFS, priced at ₹71 per share, was set at a discount of approximately 8% compared to NHPC’s previous closing price of ₹77.19. This floor price is expected to generate revenue of around ₹4,650 crore for the government. The substantial demand for the shares underscores the confidence investors have in NHPC’s long-term prospects, particularly its expanding presence in renewable energy sectors like solar and wind power. As a Navratna public sector undertaking, NHPC holds a dominant position in India’s hydropower industry, with a growing portfolio in alternative energy sources.
“The OFS attracted participation from investors, with bids exceeding the shares on offer by 3.47 times on the first day,” said Arunish Chawla, Secretary of the Department of Investment and Public Asset Management (Dipam), on social media platform X. He added that shares will be allocated based on a price-priority system, ensuring fair distribution among bidders.
The greenshoe option, which allows for the sale of additional shares if there is strong demand, was fully exercised, raising the total stake reduction to 6%. This decision not only reflects the robust interest but also positions the government to meet its disinvestment targets for fiscal year 2026-27 (FY27). NHPC’s equity stake, currently held by the government at 67.4%, corresponds to 6.77 billion shares. At the previous day’s closing price, the government’s holdings were valued at approximately ₹52,259 crore, while the company’s overall market capitalization stood at ₹77,538 crore.
Following the successful OFS, the government’s stake is projected to decrease to around 6.17 billion shares. Despite this reduction, the government will still maintain a majority ownership of 61.4% in NHPC. This outcome is critical for the broader disinvestment program, as it is anticipated to bolster the Centre’s fiscal year 2026-27 (FY27) target of raising ₹80,000 crore through equity sales and asset monetization. The OFS in NHPC is part of a larger strategy to gradually reduce state control in key public sector enterprises while enhancing transparency and market efficiency.
Timeline and Investor Categories
The OFS for NHPC opened to non-retail investors on June 2, with retail participants and eligible employees able to submit their bids on June 3. This phased approach ensures a balanced participation from different investor segments. The government has been actively pursuing OFS routes this year, as seen in its earlier disinvestment efforts with Coal India Ltd and the Central Bank of India. In the case of Coal India, the OFS also drew bids exceeding the shares on offer by over eight times on the first day, indicating a consistent trend of strong investor appetite for state-owned enterprises.
When the OFS for NHPC was announced, the government emphasized its commitment to a systematic reduction of public ownership. The proceeds from this sale, combined with revenue from asset monetization, are vital for achieving fiscal consolidation. In FY26, disinvestment activities generated ₹16,885.56 crore, marking a significant increase from ₹10,163.02 crore in the preceding fiscal year. Additionally, asset monetization contributed ₹28,420.49 crore during the same period, highlighting the dual strategy of equity sales and operational efficiency gains.
Broader Implications for Public Sector Reform
The success of the NHPC OFS underscores the effectiveness of the government’s disinvestment program in recent years. With the greenshoe option fully exercised, the stake sale now represents 6% of NHPC’s equity, raising a total of ₹4,600 crore. This figure is consistent with the projected revenue from the floor price of ₹71 per share, which is a key benchmark for the transaction. The high subscription rate also signals optimism about the company’s growth trajectory, particularly in the renewable energy space, where it is diversifying its operations beyond traditional hydropower.
As part of its public sector reform agenda, the government aims to increase market capitalization of state-run companies and reduce its financial burden. NHPC’s OFS is strategically timed, following recent OFSs in Coal India Ltd and the Central Bank of India. These sales have not only met their financial goals but also demonstrated the market’s readiness to absorb shares from major public sector entities. The government’s consistent use of the OFS route is a testament to its adaptability in navigating market dynamics while ensuring transparency in the process.
The OFS for NHPC is also a step toward achieving the government’s broader objective of improving public shareholding in state-owned companies. By selling a portion of its stake, the government not only generates liquidity but also encourages private sector involvement in critical infrastructure projects. NHPC’s diversified energy portfolio, which includes hydropower, solar, and wind initiatives, makes it an attractive asset for long-term investors. The greenshoe option’s full utilization further amplifies the financial impact, allowing the government to capitalize on the high demand without compromising its strategic interests.
Looking ahead, the government’s disinvestment program is expected to gain momentum as it continues to explore opportunities in various sectors. The NHPC OFS serves as a positive example of how targeted disinvestment can align with both fiscal and operational goals. With the market response to this sale, the government is well-positioned to meet its FY27 target of ₹80,000 crore. The combination of OFS proceeds and asset monetization revenue will play a crucial role in achieving this milestone, reinforcing the importance of a structured approach to public sector asset management.
In conclusion, the NHPC OFS exemplifies the government’s successful engagement with investors and its ability to leverage market conditions for financial gain. The 3.47 times subscription rate on Day 1 highlights the strong demand for shares in the hydropower sector, while the full greenshoe option ensures maximum utilization of this opportunity. As the disinvestment program continues, NHPC’s role as a key player in India’s energy landscape will remain central to the government’s efforts to modernize public sector undertakings and enhance market efficiency.