FIIs with stake in PowerGrid are main players for FPO

Offer opens today, 50 % net issue allocated to institutional buyers

Foreign institutional investors (FIIs) who have a stake in Power Grid Corporation of India (PGCIL) are frontrunners as prospective qualified institutional buyers (QIBs) in the follow-on public offer (FPO), set to hit the market on Tuesday.

Sources suggested FIIs like Europacific Growth Fund and American Funds Insurance Series International Fund have shown interest and are likely to submit their bid for the FPO.

PGCIL is coming up with an FPO, which includes 13 per cent (601,864,295 shares) of fresh issue of shares and four per cent (185,189,014 shares) disinvestment of shares by the government of India. The issue opens on Tuesday and closes on Thursday for institutional investors and on Friday for retail investors & employees. PGCIL has fixed the price band for the FPO at Rs 85 to Rs 90 per share.

Fifty per cent of the net issue is allocated to QIBs, 35 per cent for the retail category and 15 per cent for high network investors.

Currently, FII holding in PGCIL is at 16.87 per cent. According to the FPO prospectus, Europacific Growth Fund and American Funds Insurance Series International Fund are among the FIIs holding more than one per cent. Sources suggested the existing FIIs were keen to increase their stake.

J S Gulati, general manager (F&A) of PGCIL said, “For the QIB, we are confident that it would be entirely subscribed on the first day itself. The interest shown from FIIs and domestic institutional investors is quite positive.” Currently, Life Insurance Corporation and ICICI Prudential Life Insurance company Ltd are the major domestic institutional investors.

The issue may mop up more than Rs 7,500 crore. The company intends to utilise the net proceeds of the offer to meet the capital requirements for the implementation of certain identified transmission projects and general corporate purpose.

Five merchant bankers -- SBI Capital Markets, Kotak Mahindra Capital, Citigroup Global Markets, ICICI Securities and UBS securities – are advising PGCIL on its FPO.

Incidentally, PGCIL has witnessed an impressive response whenever it has come out with a public offering. In 2007, the IPO was oversubscribed 69 times, while a subsequent FPO in 2010 was oversubscribed 14 times.

Helicopter surveillance from December 10

PGCIL is planning to commence its proposed helicopter surveillance in order to strengthen the monitoring of transmission lines in the country from December 10 onwards.

According to  PGCIL Director (Operations) R P Sasmal, in the first stage the surveillance would be carried out along the 15,000 km transmission route along Delhi to Agra. With the successful implementation of the plan, PGCIL plans to expand this helicopter surveillance to another 50,000 km transmission line.

PGIL has roped in a contractor, which would provide the helicopter and pilot for the same. The cost for this project would be around Rs 70,000 per km.