Retail investors cold to NTPC share offer

Bulk of the subscription in the non-retail segment came from insurance companies, mainly LIC

A fifth of shares reserved for retail (small) investors in the Rs 5,000-crore NTPC offer-for-sale (OFS) failed to garner full subscription on Wednesday. The retail portion — reserved for those investing up to Rs 2 lakh each — received only 44 per cent subscription, with 36.5 million bids against 82.4 million on offer, exchange data showed.

An OFS is a share auction and the proceeds go to promoters. The NTPC OFS ended on Wednesday.

The drop in NTPC shares, coupled with the overall weakness in the market ahead of the Budget, hit retail participation, bankers said.

Shares of NTPC fell 4.2 per cent to end at Rs 118.7 apiece, below the base price of Rs 122 set by the government. Retail investors were being offered five per cent additional discount. The allotment price for retail investors works out to Rs 116 a share.

The under-subscription in the retail quota, however, will not hit the government as unallocated shares will be sold to investors in the non-retail segment, which was subscribed 1.8 times on Tuesday.

Bulk of the subscription in the non-retail segment came from insurance companies, mainly Life Insurance Corporation. Foreign investors had applied for shares worth around Rs 920 crore, according to figures provided by the disinvestment secretary.

NTPC’s share sale is the second-biggest divestment in the current financial year after Indian Oil Corporation’s, which had helped the government mop up Rs 9,370 crore.

Following NTPC’s divestment, the government has raised Rs 18,344 crore as divestment proceeds for 2015-16.

The Centre’s shareholding in the power utility will fall to 69.96 per cent.