NTPC to offload 5% via IPO in Sept

National Thermal Power Corporation (NTPC) is planning to come out with its initial public offering (IPO) around September this year.

The Rs 20,000 crore power major will offload around 5 per cent of its equity to raise about Rs 400 crore. The utility plans also to come up with a American depositary receipts issue either simultaneously with the domestic float or soon after it.

As per the revised time-table, the advisors to the issue will be appointed by end-April and the filing of prospectus before the Securities and Exchange Board of India (Sebi) will be done in June.

According to company executives, NTPC would now go in for a plain vanilla equity issue and not for a dividend differential offer as envisaged earlier.

NTPC has already approached the markets regulator Sebi to obtain a relaxation for reducing the IPO size from the stipulated 10 per cent of the existing capital base.

The utility, which was earlier planning to come out with its maiden issue in the first half of this calendar year, based on company results till September 2003, has decided to delay the float till the financial results for the current fiscal come through, executives said.

The issue also had to be delayed since NTPC's $200 million Euro bond issue launched in February this year was under agreement not to undertake any publicity for two months, as per the requirements of the Singapore Stock Exchange where it is proposed to be listed.

The Union Cabinet had on February 4 this year cleared NTPC's public float. The state-owned utility's public issue plan had run into rough weather with both the finance and the disinvestment ministry opposing it.

While the finance ministry had said that the company could better leverage its equity and raise debt, the disinvestment ministry was in favour of strategic sale than an IPO.

The Cabinet finally decided to let NTPC float an IPO following representations from the power ministry that NTPC needed to tap the equity markets to widen its base.

According to company executives, the introduction of the availability based tariff regime and new operational norms for the computation of tariffs by the Central Electricity Regulatory Commission had eroded the internal resource generation capability of NTPC.