The government on Thursday approved follow-on public offer of the state-run lending agency Power Finance Corporation worth about Rs. 5,732 crore (Rs. 57.32 billion).The exact amount to be raised through the offer can be ascertained only after the Empowered Group of Ministers decides the offer price.
The shares of the company were trading at Rs. 2,49.7 a price, down 2.44 per cent from previous close in the afternoon trade on Bombay Stock Exchange.
"The Cabinet Committee on Economic Affairs today approved the follow on public offer of the PFC," said an official statement.
The company will also infuse 15 per cent fresh equity by issuing 17,21,65,005 shares of Rs. 10, the statement added.
"The fresh equity would be 15 per cent of pre-issue existing paid up capital," it said.
Meanwhile, sources said the FPO is likely to hit the markets in the first quarter of next financial year.
The offer would comprise 5 per cent disinvestment of the government's share in PFC through putting 5,73,88,335 crore shares of Rs. 10 on sale.
The government currently holds 89.78 per cent stake in the public sector company. The market capitalisation of PFC currently stands at Rs. 28,854 crore (Rs. 288.54 billion).
The company had earlier divested 10 per cent stake through an initial public offering in 2007.
After the proposed FPO, government's stake may go down to about 85 per cent.
The statement said that the reservation of equity shares for PFC employees is subject to the limit prescribed for retail investors by SEBI, which will not exceed 0.12 per cent of the issue size.
A discount of 5 per cent of offer price will be given to retail individual investors and eligible employees.
The public offer would help PFC to meet the eligibility requirement of maintaining a CRAR (Capital To Risk Assets Ratio) of 15 per cent for industrial finance company status.
The FPO will also enhance equity base of the company to enable it to meet the growing future investment needs of the power sector.
PFC is a non-banking financial institution that provides loans for various power projects in generation, transmission and distribution sector as well as for renovation and modernisation of existing power projects.
The government has set a target of raising Rs. 40,000 crore from disinvestment this fiscal, against Rs. 25,000 crore (Rs. 250 billion) last fiscal.
