Power Finance Corp dismisses speculations over FPO in near future

State-owned non-banking finance firm Power Finance Corporation (PFC) on Tuesday dismissed speculations about the launch of follow on public offer (FPO) to raise funds in near future.

According to a BSE filing, PFC has been receiving queries on the recent news circulating in the market regarding the launch of FPO, buyback option on infrastructure bonds and also update on the enhanced liquidity package.

Thus, the company issued FAQs (frequently asked questions) in this regard to clear its position on the issues.

The company said, "There have been rumours circulating in the market on the launch of FPO by the PFC. In this regard, it is clarified that the PFC is not planning to launch any such FPO in the near future".

Also, the company stated that as on June 30, 2020, PFC's Capital Adequacy Ratio is at 17.32 per cent with Tier I capital of 13.11 per cent.

"Thus, we have sufficient cushion available over the regulatory limit of 15 per cent. Also, lending by the PFC under Discom Liquidity package will give us the benefit of lower risk weight on account of state government guarantee. This will help in leveraging our capital more efficiently," it added.

Given the current capitalisation profile, it believes that the PFC's capital levels are adequate to take care of asset side risks and future growth.

Therefore, PFC is not envisaging any requirement for capital augmentation at the moment, it added.

There has been some information circulating about the launch of buyback/exit option by PFC on the infrastructure bond already issued by it.

It mentioned in the FAQs that as of now, PFC has not introduced any new buyback/exit option nor has it appointed any agency to offer such buyback/ exit option on its bond issuance, including infrastructure bonds.

Therefore, the buyback/exit option as per the existing terms and conditions of bonds issue will continue to be available to the investor. Further, there will be no impact on principal and interest servicing of these bonds, it added.

As per our understanding, the secondary market purchase has been initiated by Lotus Securities. Therefore, investors are advised to exercise due caution while dealing with such type of communication, the company stated in the FAQ.

In September 2020, the government has allowed enhanced funding to Discoms for clearance of their outstanding dues as on June 30, 2020.

The lending for the enhanced portion will be co-funded by PFC and its subsidiary REC equally.

The company said, "We expect that in near future additional fund requirement would be around Rs 30,000 crore to Rs 35,000 crore. PFC is adequately placed on the liquidity front in this financial year as well, raising almost Rs 58,000 crore from the domestic markets at competitive rates, including Rs 11,000 crore for the liquidity injection package".