FPO- Follow on Public Offer

 It is an issue made by a company that has already gone public and listed its shares
through an IPO. The different types of FPOs are-

A ) Public issue
B) Offer sale
C) Composite issue -

Consideration for an FPO

 Pricing
 Role of promoters
 Timing of the FPO
 Comparison with other alternative sources like debt

.
Reason for FPO

 Massive business expansion plan

 Hard to get debt or loan
 Cost factor

“One must remember that one cannot make an FPO with an IPO mindset. In an
FPO, a company cannot shake off its past and its present market quotations”

Reason for this-

 Pricing and listing related gains

FPO of NTPC -
Objects of the Issue:

The objects of the Offer are to carry out the divestment of 412,273,220 Equity
Shares by Government of India. NTPC Limited will not receive any proceeds
from this FPO.

Issue Detail:
 »»  Issue Open: Feb 03, 2010 - Feb 05, 2010
  »»  Issue Type: 100% Book Built Issue FPO
  »»  Issue Size: 412,273,220 Equity Shares
  »»  Issue Size: Rs. 8,286.69 Crore
  »»  Face Value: Rs. 10 Per Equity Share
  »»  Issue Price: Rs. 201 - Rs. Per Equity Share
  »»  Market Lot: 28 Shares
  »»  Minimum Order Quantity: 28 Shares

 Listing date : Mar 18, 2010

 Listing price : 201.80 NSE
What is an IDR?
An Indian Depository Receipt is a way for a foreign company to raise money
in India. The foreign company deposits its shares with a custodian(like SBI) ,
and then the custodian issues depository receipts based on these shares.

Any company listed in the country of incorporation can issue IDRs. If –

Pre-issue capital and free reserves of at least $50 million.

Market capitalization of atleast $100 million or more during last three

years.

Made profits in three of the preceding five years

How will it work as IPO ?
The process is similar to an initial public offering where a draft prospectus is filed
with the SEBI.

The minimum issue size is $500 million (around Rs 2,250 crore).

Shares underlying IDRs will be deposited with an overseas custodian who will hold
shares on behalf of a domestic depository.

IDRs will be issued through a public offer in India in the demat form and will be
listed on Indian exchanges. Trading and settlement will be similar to those of Indian
shares.

.
Stan- Chart IDR Issue Basic Information
Issue Detail:
 »»  Issue Open: May 25, 2010 - May 28, 2010
  »»  Issue Type: 100% Book Built Issue IDRS
  »»  Issue Size: 240,000,000 Equity Shares of Rs.
  »»  Issue Size: Rs. 2,496.00 Crore
  »»  Face Value: Rs. Per Equity Share
  »»  Issue Price: Rs. 100 - Rs. 115 Per Equity Share
  »»  Market Lot: 200 Shares
  »»  Minimum Order Quantity: 200 Shares
  »»  Listing At: BSE, NSE

Listing Date : Friday, June 11, 2010

 Issue Price : 104 Rs.
 Listing Price : 106 Rs.
 CMP : 111 Rs.
Dividends related to IDR ( in case of Stan-Chart )
For this particular issue – 10 IDR = 1 share

The same is true for Rights issues also. If Stan Chart announces a rights issue, you
will have rights, similar to stocks, and there will be a price set in Indian rupees
that you can pay to get into such issues.

If you are interested, then you have voting rights too, it means-

10 IDR = 1 Voting Right

Taxation related to IDR
DIVIDEDND

For starters, dividend tax will be 30% (plus 10% surcharge) on all the dividends
Investors don’t need to pay any dividend taxes on other common stocks in India.

SHORT TERM CAPITAL GAINS

On Indian stocks, the short term capital gains is charged at 15% plus surcharge.
In the case of IDRs, the short term capital gains will be charged at 30%.

LONG TERM CAPITAL GAINS

No tax till date on Indian stocks

In the case of IDRs – investors will need to pay a 20% long term capital gains plus 3%
surcharge

That is a pretty significant hit right there, when compared with other stocks. There is one
important point relating to these taxes, and that is the Direct Tax Code,which is expected to be
implemented next year..
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