Buyers go overboard in NHPC’s oversubscribed IPO

Indian state-run NHPC’s up to Rs 6,000 crore ($1.26 billion) IPO was fully covered within a short period of starting booking today, according to the Wall Street Journal. The deal marks the first IPO by an Indian state company in 18 months.

NHPC, formerly known as National Hydroelectric Power, had offered Rs 167.73 crore ($35.1 million) shares with a face value of Rs 10 each. Its investment demand suggests the deal is likely to be priced toward the top of its indicated band of Rs 30 to Rs 36 per share, the WSJ reports. 

NHPC, India's largest producer of hydroelectric power, said it plans to use the proceeds to finance construction and development of power projects.

The portion of shares reserved for qualified institutional buyers was overbid a little more than six times, while bids from retail individual investors went overboard by 0.09 percent.

Demand for the shares was expected because of an appetite for government-issued securities, according to the WSJ. The company is selling 1.1 billion new shares, while the government is offloading nearly 560 million shares through the offering.

Following the IPO, the government is expected to own 86.4 percent of NHPC.

The IPO, which was initially thought to raise between Rs 25 billion and Rs 28 billion, is expected to close Aug. 12 (see BRIC’s eyes on hydro as sector draws $600M).

According to NHPC, India has 84,000 megawatts of hydropower potential (see NHPC plans 100 MW Madhya Pradesh wind farm). The country is the fifth-largest producer of hydropower in the world (see India launches disputed hydropower plant). 

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