PowerGrid set for follow-up issue in mid-November: report

PowerGrid Corporation (PGCIL) is ready to come out with its next public offering of Rs8,000 crore in the second week of November 2010, according to a report. This would be second major issue after the largest-ever IPO of Rs14,000 crore by Coal India in the current fiscal.

Earlier this year, the government completed two divestments – National Hydroelectric Power Corp (NHPC) and Engineers India Ltd - for Rs1,079 crore and Rs980 crore respectively.

The PGCIL issue is being slotted before that of Hindustan Copper as its issue size is significant, and the government wants to complete the larger transaction on a priority basis, said The Economic Times quoting an unnamed senior official in the disinvestments ministry.

''Besides, in case of Hindustan Copper, since the public float is 0.41 per cent, the entire exercise would be similar to that of an initial public offer,'' the official added.

The proposed issue of PowerGrid will be under the fast track route, in which a company can enter the capital market immediately after filing the draft red herring prospectus (DRHP) with market regulator Securities and Exchange Board of India. PGCIL chairman and managing director S K Chaturvedi told the paper that the company planned to enter the market in November.

PowerGrid is expected to file the DRHP shortly after 6 October when it completes its three years listing period on the Indian bourses. ''It will compete three years of listing on 6 October and has the free float of more than Rs5,000 crore, which is the mandatory requirement for the fast track issue,'' he added. At the current price of Rs104.75 per share, PowerGrid has a market capitalisation of Rs44,087 crore and public float of 13.4 per cent.

The proposed issue comprises a 10 per cent divestment by the government and similar amount of fresh issue by the company. India's largest transmission utility, with a network of about 74,297 circuit km of transmission lines, has appointed four investment bankers for the issue. PowerGrid aims to raise nearly Rs4,000 crore to meet its expansion plans worth Rs55,000 crore.

The proposed FPO will also help the company in meeting new listing guidelines of a minimum public float of 25 per cent. Currently, government's holding in Power grid is 86.36 per cent, which will come down to 69.43 per cent after the issue.