PGCIL sets IPO price band of 44-52; to raise up to 3000cr

PGCIL sets IPO price band of 44-52; to raise up to 3000cr

New Delhi: Power Grid Corporation of India Ltd, the country’s biggest transmission utility, has fixed a price band of 44-52 for its initial public offer and sale of government equity to raise between 2,500-3,000 crore.

The state-run, which filed its red herring propectus with market regulator Sebi for the public offer last week, fixed the price band of 44-52 after consultations with merchant bankers. The range has also been approved an Empowered Group of Ministers set up for approving disinvestment of government holding in PSUs, official sources said.

The IPO is likely to be launched in the second week of September. The offer would constitute 10 per cent of fresh equity comprising 38.26 crore shares and sale of five per cent stake by the government amounting to 19.13 crore shares. Of the total size to 57.39 crore, about 1.39 crore shares have been reserved for employees.

At the lower end, it would raise 2,525 crore and at the upper end the compant would mobilise 2,984 crore. The company would retain 1,683-1,989 crore from the total proceeds, while the government would mop up 841-994 crore.

PGCIL is the third central power utility to tap the capital market for raising funds after NTPC Ltd in 2004 and Power Finance Corporation early this year. Like NTPC and PFC, the government will piggyback on PGCIL IPO to divest five per cent of its stake. While NTPC had raised around 5,400 crore, PFC had mopped up nearly 1,000 crore.

Power Grid Corp is raising funds from the market to part-finance its expenditure requirements. The transmission sector requires an estimated investment of 70,000 crore during the 11th plan and central utilities led by PGCIL are expected to contribute as much as 50,000 crore.