REC sets FPO floor price at Rs 203/sh

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REC sets FPO floor price at Rs 203/sh

The government has fixed the floor price for the follow-on public offer (FPO) for REC at Rs 203 per share. The price is at a 7% discount over Wednesday’s closing price. The offer is to open on February 19.

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The government has fixed the floor price for the follow-on public offer (FPO) for Rural Electrification Corporation ( REC ) at Rs 203 per share.

The price is at a 7% discount over Wednesday's closing price. The offer of the state-run finance provider for power projects will open for subscription between February 19 and 23, 2010.

The company is going to issue 171,732,000 shares via this FPO, which consists of a fresh issue of 128,799,000 equity shares by the company and an offer for sale of 42,933,000 equity shares by the President of India, acting through the Ministry of Power, Government of India.

The issue comprises a net issue of 171,382,000 equity shares to the public and a reservation of 350,000 equity shares for eligible employees. The net issue shall constitute 17.36% of the fully diluted post-issue capital of the company.

REC is engaged in the business of financing and promotion of transmission, distribution and generation projects throughout India.

The government holding will be reduced to 66.80% post issue. The object of the offer for sale of shares is to carry out disinvestment and the company would not receive any proceeds from the offer for sale. It intends to utilise the funds being raised through the fresh issue to augment capital base to meet future capital requirements.

The book running lead managers to the issue are Kotak Mahindra Capital Company Ltd, DSP Merrill Lynch Ltd, ICICI Securities Ltd, JM Financial Consultants Pvt Ltd and RBS Equities (India) Ltd. Karvy Computershare Pvt Ltd is the registrar.

For the quarter ended September 30, 2009, the company has reported net profit of Rs 928.89 crore on total income of Rs 3,136.71 crore.

The state-run company raised over Rs 1,600 crore through an initial public offer of 15.61 crore shares in February 2008.