REC gets FIPB nod for IPO

NEW DELHI: State-run Rural Electrification Corporation has received approval from the Foreign Investment Promotion Board for its proposed Rs 1,200 crore public offer and is awaiting government clearance to appoint independent directors on its Board before hitting the capital market.

"FIPB has cleared the IPO at a recent meeting," official sources told media.

Generally, companies do not need clearance from the Foreign Investment Promotion Board for initial public offers. However, the Reserve Bank had asked REC, a non-banking finance company, to take FIPB's nod for the portion which would come from non-residents.

RBI had directed the company to seek FIPB clearance for investment from non-residents, including NRIs, FIIs, foreign venture capital investors, multilateral and bilateral development financial institutions, according to REC's draft IPO prospectus filed with market regulator SEBI.

The power financing institution is yet to fulfil Clause 49 of listing agreement of SEBI, which mandates it to have 50 per cent independent directors on its board. REC currently has five directors, including three company executives and two government nominees. As per Clause 49, it should have five independent directors as well.

"We are waiting for the government to appoint the required numbers of independent directors. The IPO would hit the market in about one-and-a-half months of the appointment," a company source said.