NHPC, Oil India may rethink IPO timeline

The department of disinvestment in the finance ministry is watching developments in the Indian stock market closely and may decide to defer the initial public offers of state-run power generation firm NHPC Ltd and the country’s second-largest oil explorer Oil India if the volatility continues.

Disinvestment had come back on the government’s agenda after the four Left parties, which had staunchly opposed it, withdrew support to the United Progressive Alliance (UPA) in July over the Indo-US civil nuclear deal.

“The government, and the companies concerned have time till early November to take a final call on the public issues. It is too early at this stage to say anything more than that,” a senior finance ministry official said today.

“The government and the companies may rethink the timeline of the IPO plan if the stock market does not stabilise,” the official said, adding that it will be difficult to get a good price in an unstable market.

The stock market volatility has already seen Rites, the Indian Railways consultancy arm, defer its IPO to early next year from this November.

Under the government’s proposed share sale programme of state-owned firms, the NHPC and Oil India issues are slated for early November. The government proposes to piggyback the issues and divest 5 per cent in NHPC and 10 per cent in Oil India.

The sales were expected to raise around Rs 2,000 crore, money that would go to the National Investment Fund, that has been set up by the UPA government to park PSU sale proceeds.

The latest round of trouble in global financial markets has impacted the Indian stock market. Experts say the worst is not over yet and believe that valuations would be further hit. Since January this year, the Sensex has lost 6,500 points, falling from an all time high of over 21,000.

Both companies have filed the draft red herring prospectus with the market regulator Sebi for approval of public issues. The issues are likely to be approved by the month end, the official added.

Once that happens, the companies in consultation with managers to the issue will fix the price band for allotment under the book-built issue.