Power Grid's follow-on offer tomorrow

State-run Power Grid Corporation's follow-on public offer (FPO) to raise about Rs 8,000 crore opens tomorrow, when the Centre would disinvest 10 per cent of its 86.36 per cent stake and the company would raise equal per centage of fresh equity.

This is part of the government's disinvestment target of Rs 40,000 crore for the current financial year.

Power Grid would be the fourth company after Satluj Jal Vidyut Nigam, Coal India and Engineers India where the central government would disinvest part of its holding.

The price band for the Power Grid FPO was fixed between Rs 85-90 on November 7 by a group of ministers.

The capital raised from the FPO will be used for part funding the PSU's Rs 55,000 crore capex plan, with Rs 30,900 crore worth of investment lined up over the next two years.

The offer comprises over 84 crore (84,17,68,246) equity shares of Rs 10 each, constituting 20 per cent of the existing paid-up capital of the company.

The Cabinet Committee on Economic Affairs gave the nod for Power Grid's FPO on July 22 this year.

The PSU has already tied up for 86 per cent of the funds required for its capex plan and the remaining amount will be raised through the FPO and bonds issues.

The company aims to augment transmission capacity to 23,400 Mw in the current fiscal from 19,800 Mw at present.

Power Grid had hit the capital market with its maiden public offer in October 2007, under which the company issued 10 per cent fresh equity and the government divested a 5 per cent stake.

Shares of the company closed at Rs 98.35, down 3.58 per cent on the Bombay Stock Exchange.