Tuesday, January 19, 2010

Indian Power Major NTPC Public Offer To Open On February 3

. Tuesday, January 19, 2010

By stockOzone team

State-run power utility NTPC will open its public offer to divest five percent of the government's stake Feb 3, while the pricing band Know what is monetary polic will be decided a day earlier. Country's largest power producer filed the draft prospectus for its follow-on public offer with market regulator SEBI last week.

Govt wants NTPC shares to stop trading on Feb 3, 4 & 5. The final QIP auction price for NTPC will be announced on Saturday, February 6. The government is divesting 5% stake in NTPC through FPO, which is expected to fetch about Rs 11,000 crore going by current market valuations.

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.

After the five per cent stake dilution, the government's holding in the power utility will come down to 84.5 per cent from the current 89.5 per cent. The Government has already appointed ICICI Securities, JP Morgan, Citi, and Kotak as investment bankers for the issue. The proceeds from the FPO would go to the Investment Fund that finances social sector schemes.

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

The last public offer in 2009-10 will be that of Sutlej Jal Vidyut Nigam. 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.

Disclosure: Author does not own any of the stocks discussed here.

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