The government plans to raise around Rs 11,000 crore by divesting 5% stake in NTPC, making it the second largest public offer in the financial year 2009-10. The issue will be launched in the first week of February and the prospectus with SEBI will be filed this week.

In the second supplement of the Budget 2009-10, the government had provided Rs 4,200 crore to be raised from disinvestment in the current fiscal. According to one estimate, now the government aims to raise Rs 27,400 crore more in the next three months till March 2010. So far, it raised around Rs 4,260 crore via sell off in Oil Inida and NHPC. In total, the government hopes to raise around Rs 32,000 crore in 2009-10, which is more than 50% of the money so far raised since 1991 through divestment programme (Rs 57,683 crore).

After NTPC, the government will divest around 8.3% stake in National Mineral Development Corporation (NMDC) to raise around Rs 14,000 crore, making it the largest public issue in the current financial year. This issue is likely to hit the market in the second week of March, according to Sunil Mitra, disinvestment secretary .

The selloff in NTPC will be done through auction of shares to institutional investors. In fact, this will be the first public offer through auction route and a pure offer for sale by the government. The company will not raise any money through this offer, a merchant banker said.

Under this scheme, the highest bidder will get the entire amount of shares asked for. Only after meeting the requirement of the highest bidder, the demand of the next highest bidder will be considered. The merchant banker said at present, NTPC was quoting around Rs 230 per share, which makes its market capitalization at Rs 190,000 crore. At this price, the valuation of the 5% government stake would be Rs 9,500 crore. But government is confident of selling its holding at premium of around 20% to the current market price.

After this, the government will sell 5% stake in the Rural Electrification Corporation (REC) to raise around Rs 1,200 crore. This issue will enter the market in mid-February. In this, the company will also raise around Rs 3,200 crore by selling fresh shares. REC has already filed the prospectus and received the permission from Sebi.

The last public offer in 2009-10 will be that of Sutlej Jal Vidyut Nigam Ltd. In this, the government aims to raise around Rs 1,200 crore by divesting 10% stake. Mitra said the process of divestment in all these four companies will be completed in 2009-10.