The Hindu Business Line : Govt approves REC’s follow-on public offer

New Delhi, Oct. 29 The Centre approved Rural Electrification Corporation’s proposal for a follow-on-public offer (FPO) on Thursday. The issue will constitute 20 per cent of the existing paid-up capital of the company — fresh equity of 15 per cent and disinvestment of 5 per cent.

“The Cabinet Committee on Economic Affairs (CCEA) has approved the fresh issue of 15 per cent and a piggyback divestment proposal of five per cent of the existing paid-up capital in Rural Electrification Corporation,” the Home Minister, Mr P. Chidambaram, told reporters after the Cabinet meeting here. He said the issue could come through before the end of the current fiscal, but did not specify the exact timeframe for the offering.

“Additional resources generated through the issue of an FPO will be utilised by REC in its investment programmes,” an official release issued after the briefing said.

After the FPO, the Government’s stake in the company would come down to 66.8 per cent from the current 81.80 per cent. REC, which finances and promotes rural electrification projects across the country, would offer part of the shares to its employees.

Going by the current market prices, a 20 per cent FPO could fetch Rs 3,200-3,500 crore. REC shares closed at Rs 197.30 on the BSE on Thursday.

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Govt approves REC’s follow-on public offer