Power Grid FPO to hit mkt on Dec 3;priced at Rs 85-90/share

The follow-on-public offer (FPO) for 17 percent stake sale in Power Grid Corporation of India (PGCIL) will hit markets on December 3 which is expected to garner up to Rs 7,083 crore.

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"The issue opens on December 3 and closes on December 5 for institutional investors and December 6 for retail category of investors and employees," an official statement said.   

The price band for the issue has been fixed at Rs 85-90 a share, PGCIL said in a filing to the BSE. Shares of PGCIL closed at Rs 95.05, up 0.69 percent on the BSE. The sale of 78.70 crore shares could fetch around Rs 7,083 crore at the upper end of the price band.

The company may garner close to Rs 5,717 crore, while the government will get around Rs 1,758 crore.

The Empowered Group of Ministers (EGoM) on disinvestment, headed by Finance Minister P Chidambaram, today decided on the date and pricing for the FPO of the state-owned PGCIL.

Earlier this month, the Cabinet had cleared the FPO of PGCIL, which will comprise 13 percent fresh equity by the company and 4 percent stake sale by the central government.

The government will sell 18.51 crore shares in PGCIL, while the company will issue fresh 60.18 crore shares through the offer. Of the fresh shares, about 2.4 percent will be reserved for the employees.

50 percent of the net issue is allocated to Qualified Institutional Buyers (QIBs), 35 percent for retail category and 15 percent for High Network Investors (HNI). Above 0.38 percent of the issue is reserved for employees.

Retail category and employees shall be given a discount of 5 percent on the issue price.

The government holding in the company will come down to 57.89 percent from the present level of 69.42 percent.

Citigroup, ICICI Securities, UBS, SBI Caps and Kotak Mahindra have been appointed as merchant bankers for the FPO. This will be the second follow-on offering from PGCIL, which sold a 10 percent stake along with a similar stake divested by the government in November 2010 at an issue price of Rs 90 a share.

The company hit the capital market with initial public offering in October 2007.

So far in the current fiscal, the government has raised over Rs 1,300 crore through minority stake sale in PSUs. It has set a target of Rs 40,000 crore from disinvestment in current fiscal.