REC FPO by fiscal end, to raise Rs 2.900 cr

A follow-on public offer of the state-run Rural Electrification Corp to raise around Rs 2,900 crore is likely to come up by the end of the current financial year (2009-10).

The company wants the capital raised to disburse loans to power projects.

The disinvestment department of the Finance Ministry is expected to prepare a cabinet note on this for circulation in the ministries concerned in the next three to four weeks.

“Once the cabinet approves, it would take 4-6 months for the company to bring its FPO, so by the end of the current fiscal it (FPO) can be expected,” power ministry sources said.

REC would issue about 17 crore shares of Rs 10 face value each. Considering the current market situation, the company is hoping to fetch about Rs 2,900 crore through premium to be decided later.

Earlier, REC had requested the power ministry to raise fresh equity of 20 per cent of the existing capital of Rs 858 crore either through Qualified Institutional Placement (QIP) or FPO. REC reported a net profit of Rs 471.82 crore in the first quarter ended June 30, 2009.

Total income of the company rose to Rs 1,508.90 crore during the June quarter from Rs 1,022.78 crore in the corresponding period a year ago.