Govt seeks merchant bankers for 4% stake sale in PGCIL

NEW DELHI: Government today set the ball rolling for 4 per cent disinvestment in Power Grid Corporation Ltd ( PGCIL) by inviting applications from merchant bankers to manage the stake sale.

The power transmission major also proposes to issue fresh 60.18 crore shares, or 13 per cent of the current equity base, through follow-on-public offer (FPO).

"The Government of India intends to divest 4 per cent of the existing paid-up capital of the company out of its shareholding and in conjunction the Company intends to issue fresh equity shares to the extent of 13 per cent of the pre-issue equity capital through FPO...," the Department of Disinvestment (DoD) said.

A part of the public offering would be reserved for the employees of PGCIL, the country's largest power transmission company.

For the proposed FPO, the DoD has invited applications from merchant bankers.

Meanwhile, the Power Ministry has sought Cabinet Committee on Economic Affairs (CCEA) approval for the share sale plan in the Navratna company, sources said.

Government proposes to dilute its 18.51 crore shares or 4 per cent stake out of its current 69.42 per cent holding.

At current rates, the government could get about Rs 1,900 crore from the disinvestment, while the company would get about Rs 6,000 crore from the sale of fresh equity.

As of now, no date has been announced for the FPO. This would be the second follow-on offer from Power Grid, which sold a 10 per cent stake along with a similar stake divested by the government in November 2010 at an issue price of Rs 90 a share. The company hit the capital market with its initial public offering in October 2007.

On the BSE, PGCIL shares closed at Rs 101.55 a piece, down 1.02 per cent over yesterday.