Govt sets floor price for PFC stake sale at Rs254 per share

The government has set the floor price for the sale of a 5 per cent stake power Finance Corporation (PFC) at Rs254 a share, a 2.14-per cent discount to the yesterday's closing price of Rs 259.55.

"The floor price of the offer ... Shall be Rs254 per equity share of Power Finance Corporation (PFC)," the company said in a BSE filing.

The offer for sale (OFS), which is slated for Monday, is expected to raise around Rs1,676 crore.

The government will be offering for sale 66 million shares, forming 5 per cent stake in PFC. The sale will reduce the government's holding in the company to 67.80 per cent.

At present, the government holds 72.80 per cent equity in Power Finance
PFC would be the second PSU to be divested under the government's disinvestment programme for the current fiscal. In April, the government had sold stake in Rural Electrification Corporation (REC).

PFC would also be the first disinvestment under the modified OFS rules of Sebi under which companies are allowed to disclose stake sale plans two 'banking' days ahead of the issue.

The Department of Disinvestment had approached Sebi in March saying they do not want trading days in-between the announcement and stake sale.

Earlier, the companies were required to give an advance notice of two trading days before the OFS, which the government says gave scope for speculators to beat down the share price of the disinvestment-bound PSU.

The divestment department has targeted to raise Rs69,500 crore through sale ok stake in state-run companies in the current fiscal, of which Rs41,000 crore would come from minority stake sale and Rs28,500 crore from strategic stake sale.

About 20 per cent of the issue size is reserved for retail investors and 25 per cent for mutual funds and domestic insurance companies.

The remaining portion is left for institutional investors, which are usually lapped up mostly by domestic financial institutions and foreign funds.