CCEA likely to take up Power Grid FPO tomorrow

Govt proposes to dilute 4% stake out of its current 69.42% holding

The Cabinet Committee on Economic Affairs may tomorrow take up the Power Ministry's proposal for a follow-on public offer of state-run Power Grid Corporation, which is expected to mop up over Rs 7,500 crore.

According to sources, the proposal is likely to be considered during the CCEA meeting tomorrow.

The follow-on public offering (FPO) will comprise 13% fresh equity by the public sector company and 4% stake sale by the central government. The company will issue fresh 60.18 crore shares through the offer and a part of it would be reserved for the employees.

Meanwhile, the Department of Disinvestment has invited applications from merchant bankers for the proposed FPO.

The government proposes to dilute 4% stake, or 18.51 crore shares, out of its current 69.42% holding.

At current prices, the government could get over Rs 1,782 crore from the disinvestment, while the company would get over Rs 5,793 crore from the sale of fresh equity.

This would be the second follow-on offering from Power Grid, which sold a 10% stake along with a similar stake divested by the government in November 2010 at an issue price of Rs 90 a share.

The company hit the capital market with its initial public offering in October 2007.

Power Grid shares today were last traded at Rs 96.25 apiece, up 0.94% on the BSE. This values the entire company at Rs 44,561 crore.