Retail investors likely to get NTPC shares at a discount

The government is planning to offer National Thermal Power Corporation (NTPC) shares to retail investors at a discount to the issue price as part of its disinvestment through an initial public offer (IPO). The IPO is slated to open on 23 September.

Senior officials said NTPC's revised draft prospectus is expected to be filed this week and disinvestment in the power utility and Balco is planned to be completed by October.

Merchant bankers for the NTPC issue had proposed a price band of Rs 30 to Rs 60 a share. Officials, however, said that there may not be too many retail investors bidding at the higher band.

The extent of discount would be worked out in due course. The government had offered shares at a discount during the Maruti IPO last year.

NTPC executives said a revised draft prospectus will be filed with the Securities and Exchange Board of India this week, increasing the offer size from 432 crore shares to 865 crore shares, representing around 10.5 per cent stake.

Of the shares with Rs 10 face value on offer, 5.2 per cent stake in the power utility would form part of the government's stake. The power ministry had proposed to dilute government holding by 24 per cent but the proposal was turned down by the finance ministry.

The company hopes to mop up around Rs 5,000 crore from the issue, chairman and managing director C P Jain said.

Meanwhile, the government has appointed AF Ferguson as the advisor for selling its residual 49 per cent stake in Balco.

Sterlite had acquired 51 per cent stake in the company and, as per the shareholder agreement, had exercised a call option in March to buy the government's remaining stake.

The Centre had to sell its remaining stake within three months but owing to general elections it sought a three-month extension.

The deadline for selling the balance stake expires next month. "There is no problem with the deadline. It can be extended to a mutually convenient date," a Sterlite executive said.

Meanwhile, the IPO will open on September 23. The company will file the prospectus with the Securities and Exchange Board of India (Sebi), the capital markets watchdog, in a day or two.

"We shall be filing the prospectus with the Sebi either tomorrow or the day after. The issue will open on September 23," chairman and managing director of NTPC, C P Jain, said.

The corporation hopes to raise up to Rs 5,000 crore by selling about 86 crore shares of Rs 10 face value through the floatation.