Power Grid Corp FPO to raise Rs 7,600 cr

Power Grid Corp plans to raise as much as Rs 7,600 cr through a follow-on public offer.

Power Grid Corporation of India Ltd (PGCIL),the nation’s biggest transmission company plans to raise as much as Rs 7,600 crore through a follow-on public offer,a top company official said here.

“We are raising around Rs 7,600 crore,through the follow-on public offer (FPO). The offering consists of fresh equity issue of 10 per cent by the company and sale of another 10 per cent by the Indian government,” Ministry of Power’s Joint Secretary and Finance Adviser,Rakesh Jain said.

The government has earlier fixed a price band at Rs 85-90 a share for its follow-on public offer (FPO). The company will be offering discount of five per cent to the issue price to retail individual bidders and eligible employees on allotment.

The follow-on public offer will open on November 9. The bid period closes for QIB bidders on November 11,and on November 12 for all other bidders.

Out of total 84,17,68,246 equity shares of Rs 10 each,half the shares on sale are part of the government’s existing stake in the firm,and half are newly issued shares by the company. As on 30 September 2010,the government held 86.37 per cent in the company.

The proceeds from FPO will be used partly for completing 11th Five Year Plan projects and also to start projects which are scheduled in 12th Five Year Plan,PGCIL’s Chairman and Managing Director,S K Chaturvedi said.

The company has taken up capital expenditure of Rs 55,000 crore in 11th Five Year Plan and Rs 1,20,000 crore in 12th Five Year Plan. The company proposes to spend Rs 12,900 crore in FY 11 and Rs 16,700 crore in FY 12,Chaturvedi said.

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As at September 30,PGCIL owned and operated 79,556 circuit kilometers of electrical transmission lines and 132 electrical substations.

In Fiscal 2010,it transmitted approximately 363.7 billion units of electricity,representing approximately 47 per cent of all the power generated in India and huge percentage of the total interstate and inter-regional transmission.

In the six months ended September 30,2010,it transmitted approximately 202.6 billion units of electricity,representing approximately 51 per cent of all the power generated in India.

Chaturvedi pointed out that Power Grid will also operate in almost all South Asian Association for Regional Cooperation (SAARC) nations because it has already linked itself with Nepal. It has links to Bhutan.

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“We are linking ourselves with Myanmar,Bangladesh and Sri Lanka. We have also been shortlisted for Oman,UAE,Nigeria and Kenya,” he said.

Commenting on pricing,Chaturvedi said,”The earlier follow-on offers of government owned-NTPC and Rural Electrification Corp have received good response and we are hopeful of repeating the success for the FPO of PGCIL.”

After the proposed issue,the company has no further equity dilution in the “near future,” PGCIL’s Finance Director J Sridharan said.