REC board approves filing draft prospectus for FPO

State-run Rural Electrification Corporation today said its board has approved filing the draft red herring prospectus with Sebi for follow-on public offer.

The board of directors, at its meeting held on January 23, has approved "the Red Herring Prospectus (RHP) for the proposed FPO of REC," the company said in a filing to Bombay Stock Exchange.

REC is likely to hit the capital market with FPO next month. The company is hoping to raise Rs 3,300 crore through 20 per cent share sale. The offer would comprise five per cent stake dilution by the government and issuance of 15 per cent fresh equity.

Post FPO, the government's share in REC would come down to nearly 66 per cent from present 81.82 per cent.

The company, engaged in financing power projects, had posted 48.58 per cent jump in net profit at Rs 474 crore for the quarter ended December 31, 2009.

Several other state-run companies such as power major NTPC, Satluj Jal Vidyut Nigam and mining giant NMDC, are planing to hit the capital market with their public offers during the current calendar year.

Indian companies are expected to embark on a mega fund raising spree by way of public offers driven by sharp recovery in the stock market. During 2009, the stock market benchmark Sensex registered a gain of about 81 per cent.