Power IPOs will take six more months to light up

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Power IPOs may not hit the capital market during 2006-07. Cabinet approval for a public float by PowerGrid, Power Finance Corporation, PFC and Rural Electricity Corporation, REC notwithstanding, adherence to regulatory norms and requirements may mean that it could be as long as six months before these companies can access the capital market, reports The Economic Times.

PFC, which had been granted Cabinet approval earlier for a 10% IPO and 5% disinvestment, had filed its draft red herring prospectus in June. Company officials say they will consult Sebi on the way forward. If PFC has to undertake the entire exercise all over again, then it may miss the March 2007 deadline.

According to sources, the whole process (even the first time around) took nearly six months. Even if Sebi allows PFC to leverage on its earlier efforts, sources say the earliest they will be able to access the market is January. "Even January could be a bit of a stretch. December is out because the overseas investor is out by mid-December.

Though January is also a stretch, it would be a good time to hit the market. The issue could leverage on the new-year sentiment," sources said. For transmission major PowerGrid and REC, accessing the capital market by March is virtually impossible.

Experts say that it would take six months to get everything in order to launch the IPOs as both companies will require to restructure their boards.

The Ministry of Power has already written to department of public enterprises to appoint independent directors for both companies. Besides, the two companies would have to get their December accounts and then get a commercial audit.

It will also require to adhere to the 45-day norm of Sebi before it can file for an IPO, followed by the opening of the issue. Sources said efforts would be made to fast track the process.