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Thursday, March 23, 2006

PFC appoints merchant bankers for IPO

Power Finance Corporation, PFC, has appointed three merchant bankers for its maiden public offer through which the government too would sell 5% of its stake, reports The Economic Times quoting PTI.

"ICICI Securities, Kotak Mahindra and Enam Financials have been appointed as book running lead managers for the PFC IPO," sources told the agency.

The three were selected from among six shortlisted bankers. Citibank, HSBC and DSP Merrill Lynch were other contenders for the issue, which could raise over Rs 1,500 crore (Rs 15 billion).

Incidentally, the lead managers are the same who handled the public offer and disinvestment of power giant NTPC in 2004.

The company is issuing 10% fresh equity while the government is divesting 5% stake. The issue comprises of 10.3 crore new shares and sale of 5.15 crore shares by the government.

The bankers have already started the due diligence of the company and help the government in selecting legal advisors.

"The legal advisors for the issue have also been appointed," sources said.

They said the company will file its draft red herring prospectus with Sebi towards April-end after compiling this financial year's results. Sebi will take around 21 days to approve the prospectus after which the issue will hit the market in June.

PFC's paid-up capital is Rs 1,030 crore (Rs 10.30 billion), which would rise to Rs 1,134 crore (Rs 11.34 billion) after the issue. Government holding would come down to 86.36% from 100% at present.

Industry sources said PFC has a book value of Rs 65 per share and it could charge some premium over it. This could translate into a price band of Rs 70-100, which would fetch between Rs 1,080 crore (Rs 10.80 billion) to Rs 1,500 crore (Rs 15 billion).

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