The government on Thursday said it will divest 10 per cent of its stake in transmission utility PowerGrid Corporation by October,as part of an about Rs 8,400 crore public issue.
The issue will comprise 10 per cent equity dilution by the government and 10 per cent issuance of fresh equity by the company,according to a decision taken by the Cabinet Committee on Economic Affairs here.
The proceeds will put money in the hands of the government,whose market borrowing this fiscal accounts for over 40 per cent of the Budgeted expenditure,besides provide the company with funds for expansion.
Power Minister Sushil Kumar Shinde told reporters that PowerGrid is likely to come out with its follow-on offer by October.
Currently,the government holds 86.36 per cent stake in PowerGrid.
The offer comprises over 84 crore (84,17,68,246) equity shares of Rs 10 each,constituting 18.18 per cent of post-offer paid-up capital of the company.
At the current market valuation,the FPO is likely to mop up about Rs 8,400 crore.
The fresh capital raising would be used for part funding investment requirement of about Rs 58,000 crore of the PSU.
The company had hit the capital market in October,2007,with its maiden public offer,comprising issuance of 10 per cent fresh equity and 5 per cent disinvestment by the government.
In an effort to raise Rs 40,000 crore from disinvestment during the current financial year,the government would sell stake in about 10 more PSUs,including IndianOil,Coal India,SAIL,RINL and Shipping Corporation.
The company targets to augment transmission capacity to 23,400 MW in the current fiscal from 19,800 MW at present.
The shares of PowerGrid settled at Rs 101.40 on NSE,up 1.5 per cent from Wednesday’s closing.