NHPC IPO by Aug-end to fetch Rs 1680 cr

Excerpts from Bazaar on CNBC-TV18 Watch the full show » BSE | NSE 09/02/12

Largecap PSU stocks will soon have company. The biggest IPO to hit the market in some time will be the National Hydro Power Corporation Ltd or NHPC. As part of the UPA government's disinvestment plan, NHPC will soon go in for an initial public offer. That's not a speculation that's what the Power Minister Sushil Kumar Shinde told CNBC-TV18 that the IPO will happen in the next three months.

In an exclusive interview with CNBC-TV18, SK Garg, CMD, NHPC, said the company hopes its initial public offering (IPO) would hit Indian markets by the end of August, 2009. He added that the company planned an IPO for 10% for its stake and said that 5% would be divested in the first tranche. The 15% equity sale with a face value of Rs 10, he said, would help the company garner Rs 1,680 crore making it the biggest IPO of recent times.

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NHPC IPO in next 3-4 months: Sushil Kumar Shinde

Here is a verbatim transcript of the exclusive interview with SK Garg on CNBC-TV18. Also watch the accompanying video.

Q: Now that the Power Minister has confirmed that you are going for an IPO could you tell us what the mix will be. Is it just a government stake sale or NHPC will also offer some equity to raise capital directly?

A: As you rightly mentioned our honourable Minister Shri Shushil Kumar Shinde has already mentioned that NHPC is going to come to the market very soon in the next three months. In this, we have got a mandate of 24% from government of India whereas in the first tranche we have been asked to go with a 10% IPO (Initial Public Offering) and 5% disinvestment. So in all we will be coming to the market with 15% where two thirds of the share will come to NHPC and one third will be going to the government.

Q: So how much  would a 10% equity sale from NHPC fetch. How much money would you end up raising equity capital?

A: In this case at present if we go by the number of shares - 15% i.e 168 crore number of shares and we have been told this is going to be the biggest ever in the history of the Indian stock market out of which two thirds almost 112 crore number of shares will be with NHPC and the remaining one third which 56 crore will be with the government. So in all we are expecting that if you go by the face value of our share which has a face value Rs 10 per share at present, the total value will be around 1,680 crore out of which two third will come to NHPC and one third will go to Government of India.

Q: Is the thinking that the IPO should happen to get first time investors into your company at the face value of Rs 10 since you are calculating at that?

A: That is a face value I am talking because the premium is anybody's guess. We are doing that exercise and we are working on it but right now I may not be able to comment on the premium side. The share is eagerly awaited in the market and we hope that we will get a good price of our share going by our strength and future plans.   

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