Around 900,000 private investors have applied for shares in the sale of the Government's remaining 40 per cent stakes in National Power and PowerGen, leaving the UK public offer 1.7 times subscribed. The Government is now expected to increase from 40 to at least 50 per cent the proportion of shares being reserved for the public.
Government advisers say that all those applying for the minimum of 200 shares are likely to be satisfied, although details of allocation will not be announced until Sunday. The minimum investment is £1,000 with a minimum first instalment of £352, suggesting that the Government is targeting the more sophisticated small investor.
Advisers said the public interest is encouraging and that a much higher number of applications might have meant allocations being heavily scaled back. The offer for institutions around the world was already "several" times subscribed yesterday, two days ahead of the 5pm Friday deadline.
The decision to increase the public allocation means that only about 30 per cent of the total shares on offer will be available to institutions. Up to 20 per cent is earmarked for share buy-backs by National Power and PowerGen, as previously agreed with the Government. There has been speculation that the buy-back was agreed because the Government feared there would be insufficient demand.
The public will receive shares in a package of three National Power to two PowerGen, although the partly paid shares will trade separately. The final price will be announced on Sunday. Dealings begin on Monday.
Private investors will pay 170p per share in National Power and 185p in PowerGen in each of the first two instalments. The final instalment will be decided by bidding among institutions, which is now taking place.
The public receive a discount of 10p per share on the price paid by institutions. Those who buy their shares through government-approved share shops also get a 25p discount on each share up to the first 800, with the discount split between the second and third instalments in order to encourage people to hold on to their shares.
This extra "incentive" discount represents a saving of £50 on the minimum investment of 200 shares up to a maximum of £200. Those who wish can take an alternative of one free share for every 15 shares bought in the public offer and held continuously until 31 March 1998.
Private investors who want to buy large numbers of shares can also apply through the international offer although without discount. The minimum investment in this case is £3,000 on the first instalment and about £8,000 in total at current market prices.