The floor price for the upcoming FPO of Rural Electrification Corporation (REC) Ltd. has been fixed at Rs.203/- per equity share. The FPO would follow the French Auction Model for pricing of issue. In a French Auction Model Institutional buyers are free to bid above the floor price so fixed and the allotment is done on a price-priority basis at differential prices  


REC FPO consists of an aggregate of 171,732,000 Equity Shares, comprising of a Fresh Issue of 128,799,000 equity shares by the company and an Offer for Sale of 42,933,000 Equity Shares by the President of India, acting through the Ministry of Power, Government of India

The FPO would remain open for subscription between Friday, February 19, 2010 and Tuesday, February 23, 2010. Check back Indian IPO Blog for latest subscription status updates and more on REC FPO!

Related Posts:
> REC FPO to follow French Auction Model
> What is a 'French Auction' Model and how it works
> Rural Electrification Corporation FPO opens from February 19, 2010
> REC FPO likely in mid February
> Rural Electrification Corporation (REC) files DRHP for FPO

French Auction Model is an alternative book building model, whereby instead of fixing a specific Price Band for the IPO, a price known as "Floor Price" is initially fixed.

Institutional buyers are free to bid above the floor price so fixed and the allotment is done on a price-priority basis at differential prices. That is to say that in this type of model, different investors get shares at different prices. If two or more investors bid a certain quantity of shares at the same price then the allotment to these investors is done proportionately

Thus, in this model, for Retail Category and HNI Category, price for bidding would be the Floor price whereas for QIB category, price can be any price above floor price

The Floor Price for the upcoming Follow-on Public Offer (FPO) of National Thermal Power Corporation (NTPC) Limited, the largest power generation company in India, is fixed at Rs.201/- per equity share. The FPO would consist of 412,273,220 equity shares of Rs 10 each at prices to be determined through an alternative book building process. Out of the above, a total of 4,273,220 equity shares are reserved for NTPC employees

NTPC was set up in 1975 to accelerate power development in India. Apart from power generation, which is the mainstay of the company, NTPC has already ventured into consultancy, power trading, ash utilisation and coal mining.

NTPC had come up with an IPO between October 7, 2004 and October 14, 2004. At the time of NTPC Initial Public Offer (IPO), the shares were offered in a price band of Rs.52/- to Rs.62/- per equity share and the issue price was fixed at the upper end of the price band, i.e. at Rs.62/- per equity share

NTPC IPO, in 2004, had received good response from both the Retail and the Institutional Investors. NTPC IPO was subscribed by around 24 times on an overall basis. Retail Category had also received good response with the Category getting subscribed about 4 times