NHPC likely to hit capital market in Aug

Hydro power firm NHPC Ltd is likely to launch its much-awaited Rs 1,670-crore (Rs 16.7 billion) initial public offer by August to part finance its expansion plans.

"We are working on the NHPC IPO. . . hopefully it would hit the market in August," a senior power ministry official said.

NHPC plans to issue 10 per cent of its new equity shares in the public offer, while the government alongside will divest its five per cent stake in the company.

According to the listing norms by market regulator Sebi, independent directors should form 50 per cent of the board which is headed by executive chairman. To meet Sebi norms, NHPC should have seven independent directors on board before it can go to the market.

"There are six independent directors on NHPC's board, once the seventh member is finalised it can hit the capital market," he said.

NHPC plans to raise Rs 1,670 crore fresh equity through IPO, it plans to bring 167 crore shares of face value of Rs 10 each, which would be offered at a premium to be decided through book building process.

With the Congress party getting a clear mandate, Prime Minister Manmohan Singh-led government is likely to push for divestment of government's stake in blue-chip public sector firms to garner resources needed for meeting flagship schemes.

The government will also divest its five per cent stake as part of the disinvestment.

The company filed the draft red herring prospectus with market regulator Securities and Exchange Board of India on August 6, 2008.

NHPC had filed DRHP in April 2007 also but it was rejected by the market regulator as the company did not have the required strength of non-official directors on board, which it now has.

The company has lined up a Rs 28,000-crore (Rs 280-billion) investment till 2012 to become over 10,000 MW utility from the present 5,200 MW generation capacity and the proceeds from the IPO would be partly utilised to finance the expansions.

The public sector company accounts for 3.7 per cent of the country's total power generation capacity.

The company plans to pump in another Rs 35,000 crore (Rs 350 billion) after the 11th Five-Year Plan (2007-12) for further expansion and is currently implementing the country's largest hydro-electric project, 2,000 MW Subansiri Lower Project in Arunachal Pradesh.