DoD to appoint law firm for PFC, REC stake sales

The disinvestment department will select one common law firm for advising on sale of five per cent stake each in PFC and REC, which could fetch around Rs 3,000 crore to the exchequer.

The government is planning to sell stakes in Power Finance Corp (PFC) and Rural Electrification Corp (REC) through the Offer for Sale (OFS) route and has also initiated the process of appointing merchant bakers for that.

The legal advisors are required to submit their bids to the Department of Disinvestment (DoD) by September 22, according to the Finance Ministry.

Government holds 72.80% stake in PFC and 65.64% in REC.

It is also considering allotting shares to PFC and REC employees at a five per cent discount to the issue price, up to a maximum of 10 per cent of the OFS size. The employees will be eligible to apply for shares worth up to Rs 2 lakh only.

Shares of PFC closed at Rs 263.90, up 0.59%, on the BSE. At the current market price, a sale of 5% stake or 6.6 crore shares would fetch the exchequer over Rs 1,700 crore.

Shares of REC closed at Rs 273.85, up 1.94%, on the BSE. At the current market price, sale of 5% stake or 4.94 crore shares could fetch over Rs 1,300 crore to the exchequer.

The combined revenue to the exchequer from PFC and REC stake sale could be over Rs 3,000 crore.

The government estimates to collect Rs 43,425 crore through disinvestment in PSUs. It has already initiated process for stake sale in ONGC and NHPC. Besides, stake sale in Coal India, SAIL, RINL is in the offing.