Power Finance's Rs 4,700-cr FPO opens tomorrow

State-run Power Finance Corporation (PFC) will raise around Rs 4,700 crore through a follow-on public offer (FPO) which is the first divestment by the government in the current financial year.

Finance Minister Pranab Mukherjee had announced plans to raise Rs 40,000 crore through divestment programme in fiscal year 2011-12.

The price band at Rs 193-203 per share has been fixed for the PFC issue, which opens tomorrow. The firm-- a Navratna financial institution that lends to power projects- is offering a discount of 5% in the issue price to retail bidders and eligible employees.

The offer will opens on May 10 and close on May 13. It comprises a fresh issue of 172,165,005 equity shares and an offer for sale of 57,388,335 equity shares by the government that holds about 89% stake in PFC.

The government is divesting 5% of its stake in the public sector company. It first divested 10% stake through an initial public offering (IPO) in March 2007.

PFC said it intends to utilise the 15% fresh equity generated through the FPO proceeds in augmenting its capital base to ensure compliance with requisite capital adequacy norms and for future capital requirements.

Power sector, a key infrastructure area, is perceived as the main driver of India's higher economic growth. The 11th Plan (2007-12) targeted 78,700 Mw installed power generation capacity addition, while the 12th Plan (2012-17) aims at adding 1,00,000 Mw.