One of the two largest lending organizations in the Indian power sector, Rural Electrification Corp. (REC), on Thursday filed its draft red herring prospectus for an initial public offering (IPO) with the Securities and Exchange Board of India (Sebi).
A.K. Lakhina, chairman and managing director, REC, said:
“Our issue size is of Rs156 crore. With an equity base of Rs780 crore and a total asset value of Rs36,000 crore, we are expecting a good valuation.”
Powering ahead: A.K. Lakhina (right), chairman and managing director of Rural Electrical Corp. Ltd, says the issue of independent directors will be resolved as they are expected to be appointed shortly.
REC will issue 156 million equity shares, corresponding to 20% of its current paid-up capital. The Union cabinet had given its go-ahead to the issue in February.
While half the shares on sale will be new shares (fresh equity), the other half will be part of the government’s stake in the company.
After the issue, government holding in the company will come down from 100% to 81.82%.
ICICI Bank Ltd, Infrastructure Leasing & Financial Services Ltd and SBI Capital Markets Ltd are the book runners to the issue.
Hitul Gutka, an analyst with India Infoline Ltd, a Mumbai-based brokerage firm, said: “The IPO proceeds will help REC with its lending programme.” And this, in turn, will take electricity to more villages.
Commenting on the development, Abani Roy, general secretary of the Revolutionary Socialist Party (RSP), said, “The government is taking advantage of the political chaos. What else can the Left parties expect if they give such a long rope to the government?”
RSP is one of the four parties that constitute the Left Front, which lends support to the United Progressive Alliance government.
The company is yet to appoint five independent directors as stipulated under clause 49 of the listing agreement between publicly listed companies and stock exchanges.
“The issue of independent directors will be resolved as they are expected to be appointed shortly. We will go to the market this year,” said Lakhina.
Ashish Sharma contributed to this story.