SJVN Board Greenlights Asset Securitization After Oversubscribed OFS – Funding Approved

The government’s 4.92% stake sale in the state-owned power producer SJVN saw overwhelming demand from institutional investors, with bids for over 20.91 crore shares, exceeding the 8.70 crore shares reserved for them.

On Saturday, September 23, SJVN Ltd.’s board granted preliminary approval to monetize a portion of the earnings from the Nathpa Jhakri Hydro Power Station by securitizing its forthcoming Return on Equity (RoE).

The state-owned hydroelectric power generation and transmission company had previously notified Indian stock exchanges that its board would be discussing a proposal to raise funds through asset securitization in its Saturday meeting.

SJVN Board Greenlights Asset Securitization After Oversubscribed OFS - Funding Approved
Institutional investors oversubscribed the SJVN Offer-for-Sale (OFS), submitting bids exceeding ₹1,450 crore.

“In compliance with Regulation 30 of the Securities and Exchange Board of India (Listing Obligations & Disclosure Requirements) Regulations, 2015, we would like to notify you that the Board of Directors, during its meeting today, granted preliminary approval for the monetization of a portion of the earnings from the Nathpa Jhakri Hydro Power Station (‘NJHPS’) through the securitization of its anticipated Return on Equity,” stated SJVN in a regulatory filing to stock exchanges.

RoE quantifies the returns generated from a company’s net assets, while the securitization process consolidates debts into portfolios, effectively assembling a collection of income-generating assets and transforming them into a single security.

SJVN’s Offer-for-Sale (OFS) witnessed strong demand, with bids totaling ₹1,450 crore.
This follows the government’s oversubscribed 4.92% share-sale offer in the state-owned power producer SJVN, where institutional investors bid for more than 20.91 crore shares against the 8.70 crore shares reserved for them, just a day earlier.

The government plans to divest its 4.92% equity stake, which includes a Green Shoe option of 2.46%. This divestment involves selling a 4.92% stake, equivalent to 19.33 crore shares in SJVN, at a base price of ₹69 per share during the two-day Offer-for-Sale (OFS). The floor price for the SJVN share sale has been set at a 15.6% discount to the closing share price of ₹81.75 on the BSE as of Wednesday.

Non-institutional investors (NIIs) demonstrated strong interest in the SJVN offering, subscribing over two times, as indicated by stock exchange data. At the indicative price of ₹69.64 per share, the total bids amounted to over ₹1,450 crore.

“The SJVN Offer for Sale garnered enthusiastic interest from non-retail investors today. The subscription reached 2.4 times the base size, prompting the government to exercise the green shoe option,” noted Tuhin Kanta Pandey, Secretary of the Department of Investment and Public Asset Management (DIPAM), in a post on X. Anticipated proceeds from this share sale are expected to exceed ₹1,300 crore for the government.

On the first day, the non-retail segment attracted more than three times the demand for the available shares, while the OFS for retail investors, which began on Friday, September 22, received 2.4 times the demand in comparison to the total shares on offer, according to stock exchange data.

The proceeds from the SJVN stake sale will contribute to the government’s disinvestment earnings for the current fiscal year. Up to this point in the fiscal year, the government has garnered over ₹5,600 crore by selling minority stakes in CPSEs. The government currently holds an 86.77% stake in SJVN.

Regarding SJVN’s stock performance

on Friday, September 22, SJVN shares opened at ₹69.60, experienced a 5% increase, reaching an intraday high of ₹74.03, and ultimately closing 1.67% higher at ₹72.27 per share on the BSE. This rebound came after a 13% decline in its stock price on Thursday.

In 2023, the stock has seen a remarkable increase of nearly 110%. SJVN’s share price has experienced a significant surge, rising by 173% from its 52-week low of ₹29.90, which it reached on September 30, 2022, on the BSE.

SJVN posted a significant decrease of more than 55% in its consolidated net profit, amounting to ₹271.75 crore for the June quarter of FY24. The company’s total income also saw a decline, dropping to ₹744.39 crore in the first quarter of the current fiscal year compared to ₹1,072.23 crore in the same period last year.

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