The government on Saturday went into an introspection mode after the much-talked about NTPC follow-on offer evoked tepid response from investors, but asserted that there would be no change in the policy.
“Response for NTPC (FPO) should have been better,” Power Secretary H.S. Brahma told reporters on the sidelines of an NTPC event.
He said “There is something wrong with us, why has the FPO been unsuccessful.”
On being asked whether the government would abandon the pure auction route for the FPO of Rural Electrification Corp, he said, “there would be no change in our policy for the REC offer.”
NTPC came out with an FPO earlier this month through which the government divested five per cent of its equity in the PSU. The size of the issue was 41.22 crore shares at a floor price of Rs. 201 per piece. At the floor price, the FPO is valued at Rs. 8,286 crore.
The public issue was oversubscribed 1.2 times.
Pure auction route is a recent phenomenon in the Indian stock markets. It differs from the prevalent practice of giving shares on book building route, which gives a price band to investors.
In the pure auction, only minimum price is given to qualified institutional buyers (QIBs) with no ceiling. QIBs can bid any price above the floor price, but retail investors and high net worth individuals receive the shares at the minimum price only, unlike book building route, where shares are given at price which receive maximum bids.
