India's largest hydropower company, NHPC, has made waves on the country's National Stock Exchange with a US$1.25bn IPO that was fully subscribed within five minutes of the offer opening on Friday.

Local media reported that the shares are marketing near the top end of the expected price range, at around $0.73 per share. The bookbuilding process will end tomorrow, after which the shares will commence trading with the total company market capitalisation expected to reach $9.2bn.

At least 60 per cent of the 1.6bn shares issued are reserved for institutional buyers, while 30 per cent is being offered to retail investors and the rest to high net worth individuals. The federal government, which had wholly owned NHPC prior to the floatation, will continue to hold about 86.4 per cent of the utility post-IPO.

NHPC designs, builds and operates hydroelectric power plants that together supply 14 per cent of India's electricity. It runs 13 power plants, located mostly in the country's north and northeast, with a total capacity of 5GW.

The company is in the process of building another 11 hydroelectric plants that will increase its capacity by 4.6GW, while an additional five facilities are awaiting regulatory approval. It is targeting a total installed capacity of 20GW by 2020.

About a quarter of India's electricity comes from hydropower generation, mostly from NHPC facilities. The company's nearest rival is Jaiprakash Hydro-Power, which has only 300MW of capacity.

Market observers credit investor interest in NHPC to the fact that is a utility – rather than hydropower's green credentials – and as such has been able to attract pension funds and other institutional investors seeking companies with steady income sources.

There is also pent-up demand for government-issued securities, with NHPC being the first state-owned firm to launch an IPO in 18 months.

However, the company's fopcus on hydropower means that it is likely to remain attractive to investors regardless of the impact of any international climate change deal or the roll out of India's long-promised low carbon strategy.

NHPC's offering is expected to rank as India's second largest IPO after that of Reliance Power, which raised $2bn in January.

Capital from NHPC's floatation will be put towards the construction of seven hydropower projects, which are slated for completion in 2012.