Rs 7,300-cr PowerGrid follow-on offer gets Cabinet nod

Govt will sell 185.1 million shares through the issue

The Cabinet cleared a proposal on Thursday for a follow-on public offer (FPO) later this financial year in Power Grid Corporation of India Ltd (PGCIL), the country’s largest power transmission company.

This will include the raising of 13 per cent fresh equity by the company and a four per cent stake sale by the government. It is expected to  fetch close to Rs 7,300 crore at the current price of the scrip.

“The FPO will help raise funds of the order of Rs 5,600 crore for the company to meet its investment programme for the next two financial years,” went an official statement.

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The government will get an estimated Rs 1,700 crore, bringing it closer to realising its current year’s disinvestment target of Rs 40,000 crore. The government currently holds 57.8 per cent stake in the company. It will sell 185.1 million shares through the issue.

Also, the company will issue a fresh 601.8 million shares through the offer. Of this, around 2.4 per cent would be reserved for employees. The government has so far raised Rs 1,325 crore in 2013-14 from disinvestment — in MMTC, Hindustan Copper, National Fertiliser, India Tourism Development Corporation, State Trading Corporation and Neyveli Lignite. The department of disinvestment has also readied sales in Power Grid, NHPC and Engineers India.

The transmission utility had sold 10 per cent stake in the market, in addition to an equal divestment by the government, in November 2010 at Rs 90 a share. The initial public offering was in October 2007. The company said it would use the additional resources generated through the FPO in its ongoing Rs 1-lakh crore capital expenditure programme for the current Plan period. PowerGrid had posted a 10 per cent jump in net profit at Rs 1,239 crore during the second quarter ended September.

The company operates a 102,000 circuit-km transmission network and plans to more than double its current inter-regional power transfer capacity of 31,000 Mw by 2017. Its share price at the BSE exchange closed at Rs 95.1 on Thursday, down 1.2 per cent as compared to Wednesday.