The Cabinet Committee on Economic Affairs has given its nod for follow-on public offer (FPO) of Power Grid.
The issue will include divestment of 4 per cent Government holding besides fresh issuance of 13 per cent equity. Going by the current price trend, this issue is expected to fetch around Rs 7,500 crore, out of which the Government will get approximately Rs 1,700 crore, while remaining amount will go to the company. This will be the company’s third public issue after its initial public offer in 2007-08 and FPO in 2010-11.
Under IPO, shares were allocated at Rs 52 each while in the first FPO, investors paid Rs 90 for a share. On Thursday, the share closed at Rs 95.10 with a loss of 1.19 per cent.
“Once the approval is received, action will be taken for implementation of the decision immediately in consonance with terms and conditions,” a Government statement said. The Government has already appointed five merchant bankers for the issue. These include Citigroup, ICICI Securities, UBS, SBI Caps and Kotak Mahindra.
The company is engaged in power transmission business with the mandate for planning, co-ordination, supervision and control over inter-State transmission systems and operation of the national and regional power grids. It is also in the telecom business and offers consultancy services.
The inter-regional power transfer capacity of the national grid is about 31,850 MW which is envisaged to be enhanced to 65,500 MW by the end of the 12th Plan. The capital expenditure in the 12th Plan is expected to be approximately Rs 1.25 lakh crore after considering the investment for new initiatives.
The FPO will help in raising Rs 5,600 crore to meet the company’s investment programme for the next two financial years and in meeting with regulatory norms of contributing 30 per cent equity to investment during the current and next fiscal.