Further carrot in power sale

MORE than 3 million investors registered for the Government's £4bn sale of its stake in National Power and PowerGen have been handed a further powerful incentive to buy shares.

The Chancellor, Kenneth Clarke, announced last week that small investors who bid through its public offer mechanism will receive a 10p discount for every share they buy.

This is on top of the existing 25p-a-share discount already available for the second and third instalments, due in February and September 1996.

Paul Williams, director of dealing services at NatWest Stockbrokers, said the discount would make investors even more likely to buy shares: "We have seen an encouraging response from the public, with more registrations than the BT3 issue. It remains to be seen whether this translates into applications, but the signs are healthy."

The 10p discount means private investors pay a first instalment of 170p per National Power share and 185p for each PowerGen share. Allocation by private tender will be on the basis of 120 National Power shares to 80 PowerGen shares, which is the minimum application.

Investors can choose to opt for a further 25p discount on the first 800 shares bought. This is on the basis of 10p off the February 1996 instalment and 15p off the final payment in September that year. Alternatively, they can opt for a bonus share for every 15 bought and held until March 1998. The maximum bonus entitlement is 80 shares.

Investors who have not registered for shares by public offer will not be eligible for the discounts, but will be able to buy shares in the retail tender offer.

This would allow them to tailor the share split as they prefer, rather than opting for that chosen for them in the public offer.

Of the two shares, many experts favour PowerGen, because as a smaller company it is less likely to lose market share.

Although the minimum application is for 200 shares costing about £350, this is only the first instalment. In 12 months' time, an equal slice will have to be found and a similar amount six months later. Investing only what one can afford makes sense.