Power Grid FPO subscribed 10 times on Day 3

MUMBAI: Power Grid Corporation of India's follow-on public offering was subscribed nearly 10 times on the third day of the book-building process. The qualified institutional buyers' ( QIB) portion, which closed for bidding on Thursday, of the book alone was subscribed over 18 times.

The bids were equally spread between the `85-90 price band for the 84.17-crore share issue. Depending on the final pricing, Power Grid will raise nearly `7,154-7,575 crore. The portions for retail investors, employees and

non-institutional investors, comprising retail high net worth individuals and corporates, will close for bidding today. Each of these three categories has been undersubscribed so far. The non-institutional portion has been
subscribed 0.87 times, retail 0.60 times and employees 0.35 times.

The strong response to the FPO is on the lines of that seen when the company had come out with itsIPO in September 2007. The offer, priced at `52, had been subscribed 65 times, mobilising around `41,223 crore.

The QIB category of the book then was subscribed 115 times, the HNI or non-institutional category by 40 times and the retail category by seven times. The shares listed at `85.

"The key takeaway from the Power Grid's FPO is that investors have been able to garner large chunk of shares without a corresponding impact on the company's share price in the secondary market," says Nimesh Shah, MD, Fortune Financial.

The share price of Power Grid Corporation of India had declined by 4% on November 8 (Monday) to close at 98.4, ahead of its 7,500- crore FPO, which opened for subscription on November 9. On Thursday the stock closed flat at 101.20 on the BSE in line with a weak market.

The fall in the share price was attributed to the wide discount between the current market price and the FPO price. The government has fixed the price band for the offering between 85 to 90 a share, a discount of 12-17% to Friday's (November 5) closing price of 102.