REC FPO may be in markets during Jan-Feb 2010

The government will come out with a follow-on public offer (FPO) for state owned Rural Electrification Corporation (REC) in January-February 2010, a Power Ministry official has said, reports CNBC-TV18.

Earlier in November, REC CMD P Uma Shankar had also confirmed the FPO would hit market by February 2010.

The company has filed a draft red herring prospectus (DRHP) with the Securities & Exchange Board of India for FPO of 171,732,000 equity shares of Rs 10 each, constituting 20% of existing paid-up capital on December 03, 2009.

 

REC is engaged in the business of financing and promotion of transmission, distribution and generation projects throughout India.

It had received an approval for FPO from the Ministry of Power on November 9, 2009. The issue consists of a fresh issue of 128,799,000 equity shares by the company and an offer for sale of 42,933,000 equity shares by the President of India, acting through the Ministry of Power, Government of India.

The issue comprises a net issue of 171,382,000 equity shares to the public and a reservation of 350,000 equity shares for eligible employees. The net issue shall constitute 17.36% of the fully diluted post-issue capital of the company.

The government holding will be reduced to 66.80% post issue. The object of the offer for sale of shares is to carry out disinvestment and the company would not receive any proceeds from the offer for sale. It intends to utilise the funds being raised through the fresh issue to augment capital base to meet future capital requirements.

The book running lead managers to the issue are Kotak Mahindra Capital Company Ltd, DSP Merrill Lynch Ltd, ICICI Securities Ltd, JM Financial Consultants Pvt Ltd and RBS Equities (India) Ltd. Karvy Computershare Pvt Ltd is the registrar. For the quarter ended September 30, 2009, the company has reported net profit of Rs 928.89 crore on total income of Rs 3,136.71 crore. The state-run company raised over Rs 1,600 crore through an initial public offer of 15.61 crore shares in February 2008.

On Friday, the share of the company closed at Rs 230.40, down 1.87% on the BSE. Its current market cap stood at Rs 19,783.53 crore. At current market price, the issue raising amount stands at Rs 3,956.70 crore.