SBI to get largest chunk of NTPC IPO

The State Bank of India (SBI) is set to get the highest allotment of shares, worth almost $40 million (approximately Rs 180 crore), in the recently concluded NTPC initial public offer (IPO).

Merchant bankers confirmed that the State Bank of India, LIC, UTI, HSBC, GMO, Pictet, Capital International and Merrill Lynch were among the largest allottees.

The government has set a price of Rs 62 per share, the upper end of the indicated price band of Rs 52-62 for the NTPC offer. The NTPC issue for 865.8 million equity shares of a face value of Rs 10 each closed on October 14.

The shares are likely to be listed on the bourses on November 5. Market sources said the NTPC offer was attractively priced and investors were likely to get at least 15-20 per cent premium on the share post-listing, keeping in mind the huge institutional and retail demand for the IPO.

Dharmesh Mehta, head of broking at Enam Securities, said, "The response from institutions was tremendous and Enam managed to fill the entire institutional book in the very first minute of opening, which is a record in itself."

Vijay Saraf, chief operating officer at Centrum Finance, said, "The NTPC share has been priced fairly and the retail investor should get a premium on its listing."

Kashyap Pujara of Sushil Finance added: "The market has been positive, and given the demand for Indian shares from foreign institutions there should be a rush for NTPC shares post-listing. Many bidders may not have got the allotments they had sought because of the size of subscription."

Elsewhere, there is already a thriving grey market for the NTPC stock with a premium that started at around Rs 15 per share initially but gradually fell to about Rs 10 as there were sellers at higher prices according to market sources.

Said a dealer, "The retail segment has been subscribed almost three times and some of them will sell upon listing."

He added that investors, specially those who had gone for margin funding, would not sell shares below a certain premium as their cost per share would be higher. A bigger supply at higher prices has led to the premium in the grey market fall to some extent.

The NTPC IPO received a massive response and was subscribed nearly 13 times, mopping up almost Rs 68,250 crore, at Rs 62 per share. This makes it the record holder for the largest amount raised from the primary market so far.

Foreign institutional investors (FIIs) have put in bids for 6.051 billion shares, accounting for 54 per cent of the total bids received and seven times the issue size of almost 866 million shares.

On the other hand, retail investors have subscribed to 2.096 billion shares, 2.42 times the total issue size, according to the final collection numbers posted on the Bombay Stock Exchange (BSE) website.