SJVN board approves fundraising via securitization of assets after OFS gets oversubscribed

SJVN Ltd.’s board on Saturday, September 23, accorded an in-principle approval to monetisation partial earnings of the Nathpa Jhakri Hydro Power Station through securitisation of its future Return on Equity (RoE).

The state-owned company involved in hydroelectric power generation and transmission had earlier informed the Indian bourses that its board will be discussion the fund raise proposal via securitization of assets in its meeting on Saturday.

‘’In compliance with Regulation 30 of the Securities and Exchange Board of India (Listing Obligations & Disclosure Requirements) Regulations, 2015, this is to inform you that the Board of Directors in its meeting held today has accorded its in-principle approval for monetisation of partial earnings of the Nathpa Jhakri Hydro Power Station (‘NJHPS’) through Securitisation of its Future Return on Equity,” said SJVN in a regulatory filing to the stock exchanges.

RoE is a measure of the returns generated on the company’s net assets. The securitisation process groups debt into portfolios. It involves bringing together a group of income-raising assets and converting them into one security.

SJVN OFS oversubscribed; buyers put in bids worth ₹1,450 crore

The above development comes one day after the company’s offer-for-sale (OFS) received a robust response from investors. The government’s 4.92 per cent share-sale offer in state-owned power producer SJVN was oversubscribed on Thursday with institutional investors bidding for over 20.91 crore shares against 8.70 crore shares reserved for them.

The government will divest its 4.92 per cent equity including a Green Shoe option of 2.46 per cent. The government will sell a 4.92 per cent stake or 19.33 crore shares in SJVN at a floor price of ₹69 per share through the two-day OFS. The floor price of the SJVN share sale was fixed at a discount of 15.6 per cent over Wednesday’s closing share price of ₹81.75 on the BSE.

Non-institutional investors (NIIs) subscribed the SJVN issue by over two times, as per stock exchange data, At the indicative price of ₹69.64 per share, the bids are cumulatively worth over ₹1,450 crore.

“Offer for Sale in SJVN received enthusiastic response from non-retail investors today. The issue was subscribed 2.4 times of the base size. Govt has decided to exercise the green shoe option,” Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey posted on X. The government is expected to garner more than ₹1,300 crore from the share- sale.

While the first day saw the non-retail portion get more than 3x the demand for the shares on offer, the OFS for retail investors – which opened on Friday, September 22, received 2.4x demand compared to the total number of shares on offer, according to stock exchange data.

The proceeds from the SJVN stake-sale would add to the government’s disinvestment kitty in current fiscal year. So far this fiscal, the government has raised over ₹5,600 crore from selling minority stakes in CPSEs. The government holds 86.77 per cent stake in SJVN.

SJVN Stock Movement

On Friday, September 22, shares of SJVN opened at ₹69.60 and rose around 5 per cent to hit an intra day high of ₹74.03, before settling 1.67 per cent higher at ₹72.27 apiece on the BSE. This was after a 13 per cent decline in its stock price on Thursday.

The stock is still up nearly 110 per cent so far in 2023. SJVN share price has surged 173 per cent from its 52-week lows of ₹29.90 which it hit on September 30, 2022, on BSE.

SJVN reported an over 55 per cent dip in its consolidated net profit to ₹271.75 crore in the June quarter of FY24. The total income of the company declined to ₹744.39 crore in the first quarter of the current fiscal from ₹1,072.23 crore in the year-ago period.