Indian IPO

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Friday, May 19, 2006

PFC proposes Rs 60-70 price band for IPO - To file DRHP on May 22 with Sebi

The state-run Power Finance Corporation’s (PFC) price band for its proposed initial public offering (IPO) would range between Rs 60 and 70. The company would file its draft Red Herring prospectus (DRHP) with the market regulator Securities & Exchange Board of India (Sebi) on May 22. PFC’s IPO would be launched from July 1.

The IPO would be managed by Enam, ICICI Securities and Kotak Mahindra. PFC sources told FE, “PFC is looking at the price band of Rs 60-70.

The company will use the proceeds from IPO for pursuing its business plans. The company expects oversubscription of the proposed IPO alike NTPC.”

PFC proposes to raise around Rs 1,500 crore through the issue of 103 million fresh shares, or 10% of PFC’s pre-issue paid-up capital. In addition, the government is expected to sell 5% of its stake in the company’s pre-issue paid-up capital through the IPO.

Post-issue, the company would have 1.133 billion shares. The government’s stake in PFC would be reduced to 86.40% after the issue.

Currently, the government holds 100% equity, or 1.03 billion shares, in the company. The government is divesting 51.5 million shares in the IPO.

PFC, a non-banking finance company for the power sector, would only be the second state-owned power firm to be listed on the stock exchanges after NTPC. PFC chairman and managing director VK Garg declined to comment on the proposed IPO.

However, at a seminar on the power sector held in Mumbai on Sunday, Mr Garg said that PFC plans to increase its disbursements to $5 billion in 2007-08 from $2 billion in 2005-06. He said PFC’s disbursement for the current fiscal would be $3 billion.

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