Cabinet clears Power Grid’s follow-on offer

At current market valuations, it is likely to fetch Rs.7,500 cr

Giving a big boost to the disinvestment programme to raise Rs.40,000 crore this fiscal, the Cabinet, on Thursday, gave its approval for the follow-on public offer of Power Grid Corporation of India Limited (PGCIL) to raise about Rs.7,500 crore.

“The 17 per cent follow-on public offer of PGCIL has been cleared by the Cabinet Committee on Economic Affairs (CCEA). This includes 13 per cent fresh equity and 4 per cent stake sale by the government,’’ Minister of State for Power (Independent charge) Jyotiraditya Scindia said after the meeting.

The government will sell 18.51 crore shares in the public sector company.

The company will issue fresh 60.18 crore shares through the offer. Out of these fresh shares, about 2.4 per cent would be reserved for employees. At current market valuations, the FPO is likely to fetch close to Rs.7,500 crore.

Post-FPO, the government stake in the company will come down to 57.89 per cent from 69.42 per cent. The company may garner close to Rs.5,700 crore while the government will get an estimated Rs.1,700 crore.

Reports said Citigroup, ICICI Securities, UBS, SBI Caps and Kotak Mahindra have been appointed as merchant bankers for the FPO.

This would be the second follow-on offering from Power Grid, which sold a 10 per cent stake along with a similar stake divested by the government in November 2010 at an issue price of Rs.90 a share.