Govt limits power IPO size at 10% of post-issue cap

NEW DELHI: The government has decided to limit the size of the initial public offers (IPOs) of four state-run power companies to 10% of their post-issue capital in first phase and the process is to be completed by March 2007. The companies would be expanding their capital by issuing fresh shares that would account for 10% of the capital in the first phase, power secretary R V Shahi said.

The government has cleared the IPOs of Power Finance Corporation (PFC) National Hydroelectric Power Corporation (NHPC), Rural Electrifiction Corporation (REC) and Power Grid Corporation of India (PGCIL).

For NHPC and PGCIL, the Cabinet has approved issuing of fresh shares to the tune of 24% of its capital, while for REC the clearance is for 20% in tranches. For PFC, the Cabinet approval is for 10.22%.

NHPC has even got the nod to sell its shares in the international markets. Shahi said PFC’s IPO would be the first one to hit the market in January or at most February. “We would like to complete the entire process by March,” he added.

Of these companies, the IPO of NHPC could be the largest. With a share capital of Rs 10,349 crore, NHPC would be able to offer shares worth up to Rs 2,500 crore at a premium. The company has an authorised capital of Rs 15,000 crore.

For PFC, it would be another shot at the IPO. Its first attempt at entering the market was aborted as the government went back on its decision to disinvest 5% shares in the company, along with the IPO, following stiff opposition from its allies.