NTPC Follow up offer

In a follow on public offer, the cabinet has announced a 5% divestment in NTPC. The government’s stake would now reduce to 84.5% from 89.5% earlier post this divestment.

Here is a verbatim transcript of Sajeet Manghat’s comments on CNBC-TV18. Also watch the accompanying video.

The NTPC follow-on-public (FPO) offering would be a big one. If you look at the market cap of NTPC, it is around Rs 176,000 crore and a 5% divestment would mean we are looking at a current market price in the range of Rs 8,860 crore. This is just on the basis of current market price. This is expected to go up because of the kind of reaction which we are going to see in the markets and it will take atleast a month or two before the FPO will come into the market but it will be a big FPO to the tune of nearly USD 2 billion and it may perhaps be the first fast track issuance, which NTPC would be witnessing. The entire guidelines came out in 2007 and since then not a single company has gone through this route but what bankers have told us is that it could be a fast track one for NTPC primarily because it meets all the guidelines, it has been listed on the stock exchanges for three years, the average free float market cap for NTPC is over Rs 10,000 crore and that gives it the eligibility criteria to go for this issue. What the merchant bankers will have to do is get a principle nod from stock exchanges and file the prospectus with Sebi for record purposes only. So there would be no delay in getting a Sebi in NTPC’s case.