The government on Thursday cleared state-run Power Grid Corporation's proposal for a follow-on public offer (FPO), which is expected to fetch over `7,500 crore.
This would be the company's second FPO. Earlier, PowerGrid had sold a 10 per cent stake along with a similar stake divested by the government in November 2010 at an issue price of `90 a share. The company had hit the capital market with its initial public offer in October 2007.
“The 17 per cent follow-on public offer of PowerGrid has been cleared. This includes 13 per cent fresh equity and 4 per cent stake sale by the government,” Jyotiraditya Scindia, Minister of State for Power told reporters after the Cabinet Committee on Economic Affaird (CCEA) meeting.
The government will sell 18.51 crore shares in the public sector company, which will issue fresh 60.18 crore shares through the offer. Out of this fresh shares, about 2.4 per cent would be reserved for employees.
At current market valuations, the FPO is likely to fetch close to Rs 7,500 crore. Post-FPO, the government stake in the company will come down to 57.89 per cent from current shareholding of 69.42 per cent. As per estimates, PowerGrid may garner close to Rs 5,700 crore, while the government will get an estimated Rs 1,700 crore.
Citigroup, ICICI Securities, UBS, SBI Caps and Kotak Mahindra have been appointed as the merchant bankers for the FPO.
Meanwhile, PowerGrid’s assets have jumped to a whopping Rs 85,000 crore from `50,000 in 2011-12. The company also has chalked out plans to borrow over Rs 16,000 crore during the current financial year. It has already raised close to Rs 9,000 crore through a mix of instruments like External Commercial Borrowings and loans from multi-lateral funding agencies like the World Bank and Asian Development Bank.
Shares of PowerGrid closed at Rs 95.10 apiece, down 1.19 per cent on the BSE.