SJVN stock tanks 10% as govt announces 4.9% stake sale via OFS

Shares of public sector hydroelectric power generator company SJVN Ltd tanked 10% in early deals on Thursday after the government decided to sell a 4.92% stake in it via a two-day offer for sale, with a 'green shoe' option of 2.46%. The floor price of the offer will be ₹69 per equity share, a 15.6% discount on Wednesday's closing price. At that price, the stake sale will fetch the Centre around ₹650 crore.

The offer for sale in SJVN opens today. Secretary, DIPAM (Department of Investment and Public Asset Management), says: "Offer for sale in SJVN opens tomorrow for non-retail investors. Retail investors can bid on Friday. The government will divest 4.92% equity including a Green Shoe option of 2.46%.”

The government will sell up to 9,66,72,962 equity shares having a face value of ₹10 each. The offer will take place on a separate window of the stock opening and closing of the offer exchanges on September 21, 2023, and September 22, 2023, from 9:15 a.m. to 3:30 p.m.

Only non-retail investors will be allowed to place their bids on September 21, 2023. While placing their bids, non-retail investors may indicate their willingness to carry forward their unallotted bids to T+l day for allocation to them in the unsubscribed portion of the retail category.

In the employee category, the number of equity shares will be equivalent to up to 0.5% of the paid-up equity capital of the GoI subsequent to completion of the offer. The offer says the employees will be eligible to apply for equity shares up to ₹2,00,000. In the event of under-subscription in the employee portion, the unsubscribed portion may be allotted on a proportionate basis, for a value in excess of ₹2,00,000, subject to the total allotment to an employee not exceeding ₹5,00,000.

Those non-retail investors who will place bids on T-Day and have chosen to carry forward their unallotted bids to T+1 Day will be allowed to carry forward for allocation to them in the unsubscribed portion of the retail category.

The allocation of shares will be done “at or above the floor price” on a price priority basis at multiple clearing prices in accordance with the OFS guidelines, says the offer.

No single bidder other than mutual funds will be allocated more than 25% of the offer shares. A total of 10% of the offer shares will be reserved for allocation to retail investors. The stock exchanges will decide the quantity of offer shares eligible to be considered in the retail portion, based on the floor price declared by the seller.

The SJVN Ltd stock, meanwhile, has tanked 8.4% in the opening trade on Thursday amid a weak broader market. The stock opened a gap down at ₹74.69 and declined to an intra-day low of ₹73.53 (10% fall). At the current share price, the m-cap of the company stands at ₹29,155.15 crore.