Public sector power major National Thermal Power Corporation, in a move unprecedented in India, plans to offer shares carrying lower voting rights but higher dividend.
NTPC executives said the company would come out with its Rs 400 crore (Rs 4 billion) initial public offering in November 2003.
The power ministry will seek Cabinet approval this month for NTPC's float. The power major has a Rs 7,812.55 crore (Rs 78.12 billion) paid up-capital.
The Companies (Amendment) Act, 2000, allows firms to issue different categories of equity, including shares with different dividend rights.
Overseas, shares with different voting rights and dividend are called tracking stocks. The dividend and other rights of shareholders are typically linked to the performance of specific businesses of a company.
In recent years, several global companies, including AT&T, have issued such stock.
Such shares generally come with incentives like a higher dividend or a lower issue price.
NTPC plans to offer new shareholders a dividend higher than what it pays the government, which now owns 100 per cent of NTPC's equity. The company has paid 20 per cent of its profits as dividend over the last 4 years.
NTPC executives said the company was also considering raising funds through American depository receipts.
The size of the overseas float is likely to be 5 per cent of the company's current equity and is being scheduled for after the IPO.
The premium for the IPO is likely to be between Rs 20 and Rs 40 a share, with the total mop-up expected at around Rs 1,500 crore (Rs 15 billion).
Power plan