PFC gets Board nod to launch PE Fund

The board of directors of Power Finance Corporation Ltd (PFC) has given an approval to a proposal to launch private equity fund for the power sector with a target of the total fund size of US $ 1 billion (approx. Rs 4,948 crore).

"The board of directors has given approval to the proposal of launching a private equity fund by the company. We will issue tenders for choosing a partner to the PE fund. Initially, we the fund size is likely to be kept at around US $ 300 million, while we target it to be about US $ 1 billion," said Satnam Singh, chairman and managing director, PFC, who was in Ahmedabad on Tuesday to announce company's financial results.

 

"Since we specialise in power sector lending, we need a partner who specialises in fund management. First we will make a trust, where PFC will hold 5 per cent stake then form an asset management company (AMC) and then roll out the fund," Singh added.

The process of selecting a partner to the fund is expected to be completed within next six months time. It may be mentioned here that earlier PFC had expressed its plans for setting up a private equity fund for the power sector. The company was looking for participation of Indian and overseas investors in the proposed PE Fund.

However, with company's board of directors giving an approval to the proposal to set up PE Fund for power sector, its plans to enter equity financing space will be materialised in near future.

As the fund would be registered as a private fund, it would remain out of government control.

PFC Q2 net dips by 40%

Power Finance Corporation Ltd (PFC), public sector lender to power projects in India has registered 40 per cent decline in the net profit from Rs 700.8 crore in September 2010 to Rs 419 crore for the second quarter ended September 2011.

The fall in the net profits was mainly on account of forex loss of Rs 529 crore during the September quarter due to currency fluctuations, company officials maintained. "Even as our profits have declined for the second quarter, our net loan assets have increased by 26 per cent from Rs 87,906 crore to Rs 1,10,421 crore now. The decline in the net profit was due to rupee depreciation leading to a forex loss to the company during that quarter," said Satnam Singh, chairman and managing director, PFC.

Company's net sales rose 24 per cent to Rs 3,142 crore from Rs 2,531 crore during the same period. Singh, who was in Ahmedabad to announce the financial results of the company, informed that the company has 'zero' non-performing assets in the state sector, while in the other sectors, PFC has about 0.19 per cent NPAs.

For the first half of the financial year, company's total income jumped 22 per cent at Rs 6,069 crore from Rs 4,956 crore registered in the same period last year. Profit after tax (PAT) fell by 18 per cent from Rs 1,353 crore to Rs 1,106 crore for the H1 period.