Mumbai: Mahanagar Gas Ltd, the sole supplier of natural gas in Mumbai and its adjoining areas, plans to raise 1,040 crore through an initial public offering (IPO).

The Mumbai-based firm, a joint venture of state-run GAIL (India) Ltd and BG Asia Pacific Holdings Pte Ltd (now owned by Royal Dutch Shell Plc), will offer shares at a price band of 380-421 to investors.

The sale will open on 21 June and end on 23 June.

Mahanagar Gas sells CNG and PNG in Mumbai and its adjoining areas, including Raigad district in Maharashtra.

The proceeds of the IPO will go to the two holding companies which will offload 12.5% stake each. The government of Maharashtra holds 10% stake in the company. Post offer, the shareholding of GAIL (India) and BG Asia will drop to 32.5% each.

At present, GAIL (India) and BG Asia own 45% each in Mahanagar Gas, which was incorporated in 1995.

Mahanagar Gas currently has nearly 850,000 customers for PNG that includes households and commercial customers, while nearly 470,000 vehicles run on CNG sold by the company through a network of 188 stations.

The company said it is looking to expand in both domestic and well as industrial and commercial segments.

“We are looking at bidding for new cities, as and when they come up for bidding. We are also looking at penetrating more and more into the households in Mumbai and open new gas stations to expand our network," said Rajeev Mathur, managing director of Mahanagar Gas, on Tuesday.

Mathur added that the company has a robust infrastructure in place which will support its future growth. “The company has significant growth potential and it is backed by favourable regulatory environment and the policies of the government."

Due to favourable policies and regulatory developments, including domestic gas allocation and ban on heavy diesel passenger vehicles in some geographies, CNG business is likely to get a fresh impetus. Also, at 41.20/kg, the pricing of CNG is competitive when compared to petrol and diesel.

In Mumbai, petrol retails at 70.18/litre and diesel 59.21/litre.

Kotak Mahindra Capital Co. Ltd and Citigroup Global Markets India Pvt. Ltd will manage the share sale.

Mahanagar Gas reported revenue of 2,135 crore in 2014-15, up from 1,885 crore in the previous year. Profit grew marginally to 301 crore in 2014-15, from 297 crore in the previous year. For 2014-15, CNG and PNG businesses accounted for 65.1% and 34.9% of MGL’s total gas sales revenue, respectively.