State-run lender Rural Electrification Corp Ltd plans to raise up to 16.38 billion rupees from its initial public offer, due to open this month, three sources involved in the deal said on Tuesday. The company has set a price band of 90-105 rupees a share for its 156-million-share offer, which represents 18.18 percent of the post-issue diluted equity capital. The offer values the company at 90 billion rupees at the top end of the price band.
"The company is about to file documents with the ROC (Registrar of Companies) today," a banking source said.
The book-built issue will equally comprise a fresh issue of shares and disinvestment by the union government. Post-issue, the government's stake in the firm will come down to 81.82 percent, from 100 percent now.
The funds raised from the fresh issue will be used to fund ongoing and future projects.
REC is the nodal agency for promoting rural electrification projects and also finances state electricity boards for investment in such projects. In 2006/07, it reported a net profit of 6.6 billion rupees on total income of 28.5 billion rupees.
The REC share offer is the first asset sale in a state-run power firm since the government divested a 13.6 percent stake in India's largest transmission utility Power Grid Corp Ltd in October 2007, raising 29.8 billion rupees.
ICICI Securities Ltd, IL&FS Investsmart and SBI Capital Markets are the book-running lead managers to the issue.
SOURCE : REUTERS
