PowerGrid to shed 17% via FPO by Nov 15
Oct 24 2013 , Mumbai
“The government will offload around 4 per cent of its 69.42 per cent stake while there will be another 13 per cent of fresh equity infusion. Following the stake sale, the government will hold around 58 per cent in the company,” RN Nayak, chairman and managing director of PGCIL, said in a media interaction.
Of the total proceeds, four per cent would go to the government and the rest 13 per cent would be used for expansion purposes, Nayak said. The company has lined up capital expenditure worth Rs 20,000 crore for this financial year, out of which Rs 11,000 crore has been spent already.
Pradeep Kumar, joint secretary and financial adviser to the government of India, told FC that representations had been made to the cabinet and the approval was expected shortly. ICICI Securities, UBS, Kotak, Citibank and SBI Capital have been appointed merchant bankers for the issue.
Market experts said there was sufficient demand for quality large-cap stocks with right valuations, but still the government would have to rely on institutions to complete the disinvestment. There are two other disinvestments in the pipeline, that of IOC and CIL, which have already got Cabinet approval and for which roadshows are going on.
Surjit Mishra, head of capital markets at Bajaj Capital, said the retail component was expected to remain largely unsubscribed, as retail investors were showing a preference for national saving certificates (NSCs), tax-free bonds and such other schemes. “Unless there is substantial discount from the current price, the government will have to depend on large institutions for full subscription while the retail portion is very likely to see low participation,” Mishra said.
SN Subramanian, MD for investment banking of Enam Securities, said there was sufficient demand for good large-cap companies, but only at appropriate valuations. Another expert from ICICI Securities seconded this view.
The IOC issue is expected to raise around Rs 4,000 crore with the government divesting around 10 per cent. The CIL disinvestment is likely to be the largest in this financial year, with 5 per cent government stake sale likely to fetch around Rs 9,129 crore.