Power Grid IPO opens for subscription

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Power Grid Corporation of India, India's principal power transmission company, is open for subscription with an initial public offering (IPO) of 573,932,895 equity shares of Rs 10 each for cash at a price to be decided through a 100% book building process. The company will raise Rs 2984 crore in higher end of the band.

The issue comprises a fresh issue of up to 382,621,930 equity shares by the company and an offer for sale of up to 191,310,965 equity shares by The President Of India acting through The Ministry Of Power, Government of India.

The issue comprises a net issue to the public of up to 559,954,895 equity shares and a reservation of up to 13,978,000 equity shares for subscription by employees of the company. The issue shall constitute approximately 13.64% of the fully diluted post- issue capital of the company. After the issue, the Government of India, through the Ministry of Power will continue to hold 86.36% of the diluted post-Issue paid-up equity capital of the company.

The price band for the issue, which closes for subscription on September 13, 2007, has been fixed between Rs 44 per equity share and Rs 52 per equity share.

Power Grid Corporation of India owns and operates most of India's interstate and inter-regional electric power transmission system. In that capacity, as at June 30, 2007 the company owned and operated 61,875 circuit kilometres of electrical transmission lines and 106 electrical substations. In Fiscal 2007, the company transmitted approximately 298 billion units of electricity, representing approximately 45% of all the power generated in India (Source: CEA Website, March 2007).

The net proceeds of the fresh issue shall be utilized for 15 identified transmission projects of the company. The estimated cost of these projects as on July 31, 2007 is approximately Rs 127,075 million. These projects are proposed to be funded with a debt-equity ratio of 70:30 in accordance with CERC norms. The equity component of the identified projects is to be funded by a combination of internal accruals of the company and the proceeds of the fresh issue.

The equity shares are proposed to be listed on the BSE and NSE. The book running lead managers to the Issue are: Kotak Mahindra Capital Company Limited, Citigroup Global Markets India Private Limited and Enam Securities Private Limited.