Power Grid IPO to raise $732 million

Power Grid IPO to raise $732 million

New Delhi: India’s biggest power transmission company, Power Grid Corp., received applications for all of the shares it offered in a sale starting Monday to help fund expansion of its network.

State-run Power Grid expects to raise Rs29.8 billion ($732 million) selling 573.9 million shares, the New Delhi-based company said, lowering the government’s stake to 86.36%. The stock is being offered between Rs44 and Rs52 apiece and the company’s estimate assumes the top end of the price band.

Asia’s fourth-largest economy plans to increase generation capacity by 60% and transmission ability by almost three-fold in the next five years to end blackouts. Power Finance Corp., a lender to electricity utilities, attracted demand for more than 77 times the shares on sale and surged 38% at its trading debut in February.

“The company is a virtual monopoly getting the biggest chunk of the transmission business," said R.K. Gupta, who manages the equivalent of $75 million of stocks at Credit Capital Asset Management in New Delhi. “It’s a very good long-term investment given the expansion that is planned in the power sector in the next few years."

The state-owned company will sell 382.6 million new shares and the government will sell 191.3 million shares.

The company plans to reserve 13.98 million shares for employees and the net offer to the public will be 559.95 million shares, it said on 28 August. The final price will be decided on investor demand, after the sale ends on 13 September. The shares on offer will account for 13.64% of the company’s fully diluted, post-issue capital. The government’s holding will be reduced to 86.36%.