NTPC follow-on issue first to adopt French Auction route

AHMEDABAD: The follow-on public offer of state-run utility NTPC Ltd will be the first to adopt the 'French Auction' route for selling shares to qualified institutional buyers, which is expected to bring better valuations.

Under the French Auction model, institutional buyers will be free to bid above a certain floor price. During allotment of shares, the highest bidder will get preference based on the price bids placed by them.

"After the revised ICDR (Issue of Capital and Disclosure Regulation) guidelines issued by SEBI, the follow- on public offer of NTPC will be the first issue in India in which QIB's will bid through the French Auction route," NTPC DGM Finance Sulochana Muralidharan said.

When companies fix a price band for public offers, the maximum difference permitted between the floor and ceiling prices in the band will be kept at 10 per cent.

Bidders will have to bid within the band and on the basis of demand at various price points, the company will fix an offer price to be applied uniformly to all investors.

"So QIB's will bid anything above the floor price and shall get the due quantity of shares applied for on price priority basis," Muralidharan added.

India's largest power generating company NTPC will hit the capital market between February 3-5 with an FPO to raise Rs 11,000 crore.