Besides the upcoming initial public offers of public sector units (PSUs), some of the already listed government owned companies are also in the process of floating new shares in the market which could support the revival of the primary market. Rural Electrification Corp. which lends to rural power projects, has asked government approval to raise Rs 3,000 crore(~$635 million) by selling shares.
REC may sell 170 million shares, or about 20% of its equity, to institutional investors or launch a follow-on public issue, the company’s finance head Hari Das Khunteta, said as per this.
The government which will need to clear the proposal may take a call on the issue within a month.
The fund would be used for network expansion at a time when the country plans to spend around Rs 28,000 crore to supply power to 115,000 villages in the five years to 2012, according to the finance ministry.
Analysts say REC requires capital to support its target of growing its loan book 25% by 2012. Some of those following the company feel a FPO is a good idea even as a private placement through a qualified institutional placement or a general private placement may be a better option as it takes less time. REC had raised Rs 1,640 crore in its IPO
last year, one of the few large issues which managed to get fully subscribed.