Govt clears PowerGrid FPO, to divest 10% stake

Govt clears PowerGrid FPO, to divest 10% stake

New Delhi: The government on Thursday approved disinvestment in transmission firm PowerGrid Corporation through a follow-on public offer (FPO) to raise about Rs8,400 crore.

The Cabinet Committee on Economic Affairs (CCEA) gave its nod to the 20% FPO by PowerGrid, an official statement said.

The company would issue 10% fresh equity, while the Centre would divest 10% of its stake in the PSU. The government holds 86.36% stake in PowerGrid.

The offer comprises over 84 crore (84,17,68,246) equity shares of Rs10 each constituting 20% of existing paid-up capital. At current market valuation, the FPO is likely to mop up about Rs8,400 crore.

Besides disinvestment of the government stake, the fresh capital raising would be used for part funding investment requirement of about Rs58,000 crore of the PSU.

The company had hit the capital market in October 2007, with its maiden public offer and issued 10% fresh equity, and the government divested 5% of its stake.

In an effort to raise Rs40,000 crore from disinvestment during the current financial year, the government would sell stake in about 10 more PSUs, including IndianOil, Coal India, SAIL, RINL and Shipping Corporation.

The company targets to augment transmission capacity to 23,400 MW in the current fiscal from 19,800 MW at present.