Pushing forward its ambitious disinvestment programme, the Government on Thursday approved the Rs7,300-crore follow-on offer of Power Grid which is likely to fetch Rs1,700 crore to the exchequer.
Of the total proceeds, the company is expected to get about Rs5,600 crore to meet its investment plans in the next two financial years, according to an official statement.
“The 17 per cent follow-on public offer of Power Grid has been cleared. This includes 13 per cent fresh equity and 4 per cent stake sale by the Government,” Power Minister Jyotiraditya Scindia said after the Cabinet Committee on Economic Affairs (CCEA) meeting.
“CCEA has approved the proposal of follow-on public offer of Power Grid Corp of 78.70 crore equity shares of Rs10 each constituting 17 per cent of existing paid-up capital,” an official statement said.
Power Grid offer will comprise fresh issue of 60.18 crore equity shares (13 per cent of existing paid-up capital) and offer for sale (disinvestment) of 18.51 crore equity shares (4 per cent of existing paid-up capital) held by the central government.
Shares of the company closed at Rs95.10 apiece, down 1.19 per cent on the BSE today. At current market valuations, government stake sale will fetch nearly Rs1,700 crore.
“Additional resources generated through the issue of the FPO will be utilised by the company in its investment programmes,” the statement said.
Post-FPO, the government stake in the company will come down to 57.89 per cent from current shareholding of 69.42 per cent.
According to sources, Citigroup, ICICI Securities, UBS, SBI Caps and Kotak Mahindra have been appointed as merchant bankers for the FPO.
This would be the second follow-on offering from Power Grid, which sold a 10 per cent stake along with a similar stake divested by the government in November 2010 at an issue price of Rs90 a share.