NEW DELHI/MUMBAI India's sale of a 5 percent stake in top power producer NTPC Ltd received bids for 80 percent more shares than were on offer for institutional investors on Tuesday, setting the government on course to raise about $730 million.
Indian insurers alone bid for 30 percent more stock than was on sale in the biggest share offering in the Indian market this year, the government said, without giving further details.
Assets sales are a major plank of the government's efforts to contain its budget deficit.
A slowdown in nominal economic growth has made it tougher for Finance Minister Arun Jaitley, who is due on Feb. 29 to present his budget for the next fiscal year beginning April, to stick to a fiscal deficit target of 3.5 percent of GDP.
For the current financial year, the government has budgeted for a fiscal deficit of 3.9 percent of GDP, which economists say it will achieve despite missing asset sales targets for the sixth straight year.
Before the NTPC stake sale, the biggest divestment by the state in about six months, the government had managed to raise less than a fifth of its revenue target of around $10 billion from stake sales.
Institutional investors, both foreign and local, had shown little interest in previous asset sales this fiscal year due to concerns about state companies' growth prospects.
Life Insurance Corp, India's biggest portfolio investor, bought 86 percent of a $1.4 billion share sale in refiner and fuel retailer Indian Oil Corp in August.
Foreign investors accounted for about 23 percent of the bids in the NTPC offering, which the government's divestment secretary Neeraj Gupta called "a good response". It was not immediately known how much LIC bid for in the NTPC sale.
Retail investors, for whom a fifth of the NTPC issue is reserved, can place bids on Wednesday, after which the final price and total proceeds will be ascertained. Unsubscribed shares from the retail portion will be allocated to the funds.
($1 = 68.4822 rupees)
(Reporting by Manoj Kumar and Devidutta Tripathy; Editing by Sumeet Chatterjee and Mark Potter)
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Updated Date: Feb 24, 2016 04:00:15 IST