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CCEA clears PowerGrid FPO; to fetch Rs 7,500 cr

The Cabinet Committee on Economic Affairs (CCEA) on Thursday cleared the follow-on public offer (FPO) proposal of state-run PowerGrid.

The Cabinet Committee on Economic Affairs (CCEA) on Thursday cleared the follow-on public offer (FPO) proposal of state-run PowerGrid. At current market valuations, the FPO is likely to fetch close to R7,500 crore. The company may garner close to R5,700 crore while the government is expected to get an estimated R1,700 crore.

According to sources, Citigroup, ICICI Securities, UBS, SBI Caps and Kotak Mahindra have been appointed as the merchant bankers for the FPO.

?The 17% follow-on public offer of Power Grid has been cleared. This includes 13% fresh equity and 4% stake sale by the government,? power minister Jyotiraditya Scindia said after CCEA meeting.

As per the proposal, the government will sell its 18.51 crore shares in the company. PowerGrid will also issue fresh 60.18 crore shares through the offer. Out of this, about 2.4% would be reserved for the employees. Post-FPO, the government stake in the company will come down to 57.89% from the current 69.42%.

This would be the second follow-on offering from PowerGrid, which sold a 10% stake, along with a similar stake divested by the government in November 2010, at an issue price of R90 a share.

PowerGrid hit the capital market with its IPO in October 2007. Bullish on its expansion plans, the company plans to borrow about R16,000 crore during the current fiscal. It has raised close to R9,000 crore through a mix of instruments like ECB, bonds and loans from multi-lateral funding agencies like World Bank and ADB. Meanwhile, company?s assets have jumped to a whopping R85,000 crore from R50,000 crore in 2011-12.

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First published on: 08-11-2013 at 05:28 IST
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