PFC to invite bids for $1-bn PE fund in mid-December

Power Finance Corporation (PFC) would, in mid-December, invite bids to set up a private equity fund. The power sector lender also plans to set up a trust and is scouting for a fund manager.

“We are looking to invite bids to set up a private equity fund. The bids would be invited in mid-December, and we will be coming out with advertisements,” Satnam Singh, chairman and managing director, PFC, told Business Standard. “We are keen on a domestic fund manager.”

PFC is looking to set up a fund worth $1 billion for financing power projects. “We finance various power projects across the country. Now, we are also looking at opportunities that equity financing provides,” said Singh. PFC would tie up with a domestic fund manager, which would have 51 per cent stake in the fund, he added. The remaining 49 per cent stake would rest with the government-controlled non-banking financial company.

Equity financing involves raising money for company activities by selling common or preferred stock to individual or institutional investors. PFC is one of the largest lenders to the power sector. For equity financing, it wants a candidate with expertise in fund management.

The finalisation of the deal is likely to take three-four months, Singh said.

The power sector lender had also called for bids to raise Rs 150 crore through rupee bonds. The company has received bids for around Rs 5,000 crore. “We are deciding on how much to retain, as the bids have overshot the target,” Singh said. The bids were invited for bonds with maturity periods of three to 10 years, and coupon rates ranging between 9.5 per cent and 9.7 per cent.

PFC has raised Rs 18,000 crore so far this year and would try to raise more through tax-free bonds in December.