PowerGrid price band at Rs 85-90

The government today fixed state-run Power Grid Corporation's follow-on public offering (FPO) at Rs 85-90 a share, which could fetch up to Rs 7,600 crore. The follow-on offer of 20 per cent of its capital will see the power transmission firm selling a little over 84 crore shares with a face value of Rs 10 each at a premium of Rs 7580 apiece. Retail investors will get a discount of 5 per cent on the issue price.

"We think it will be a good success story. The offering is at a discount to the market price," power ministry officials said. The cabinet committee of economic affairs had given its nod for the FPO a fortnight ago. The share, which had been rising since then, closed at Rs 102 on Diwali. At Rs 102, the stock trades at 17.2 times its estimated 20102011 earnings, and analysts expect it to trade up further in the years to come, but do not see any remarkable spurts. The follow-on offer will hit the market on Tuesday .

Bids will close on Thursday for institutional investors and on Friday for retail buyers. Half of the offering will be in the form of government shares and the rest will be fresh shares issued to the public by the company to raise funds for expansion. After the FPO, the government holding will come down to 69.4 per cent. The company had hit the capital market in October 2007 with its maiden public offer. The government had divested 5 per cent of its stake at that time. PowerGrid plans to spend up to Rs 58,000 crore on ex panding and strengthening transmission network.  Officials said the money would go towards increasing the transmission network by 18,711 circuit km. The company will build nine high-capacity transmission corridors.

For the first half of the fiscal ended September, Powergrid's profits grew 34 per cent. The government raised around Rs 15,200 crore through the Coal India IPO last month and about Rs 2,000 crore from two smaller offers. Though the government has set a target of Rs 40,000 crore from divestments this fiscal, it may actually end up raising as much as Rs 58,000 crore. thanks to the buoyant stock market.

An initial public offer by Manganese Ore India in early December and a follow-on offer by Hindustan Copper are on the cards.Offerings of big state-run firms such as Indian Oil Corporation (IOC), Oil and Natural Gas Corporation (ONGC) and Steel Authority of India Ltd (SAIL) are expected by January-March. Officials said IOC's issue would be around Rs 19,00020,000 crore, ONGC's Rs 15,000 crore and SAILs' Rs 18,000 crore.

Source: http://www.telegraphindia.com/

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