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Govt tracks markets ahead of REC issue

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‘Good response from institutional investors’

Power meet: The Union Minister for Power, Mr Sushil Kumar Shinde (right) and the NTPC Chairman and Managing Director, Mr T. Shankaralingam, at a conference in the Capital on Wednesday. —
Power meet: The Union Minister for Power, Mr Sushil Kumar Shinde (right) and the NTPC Chairman and Managing Director, Mr T. Shankaralingam, at a conference in the Capital on Wednesday. —

New Delhi, Feb. 13 The Government is tracking the markets closely for signs of turmoil in the wake of the upcoming Rural Electrification Corporation (REC) issue.

Choppy conditions

Responding to queries regarding the possibility of the public issue being postponed in light of investor interest, Power Minister Mr Sushilkumar Shinde said, “I have spoken to the Chairman and Managing Director (of REC) on the issue. We are concerned about the market conditions.” He, however, did not comment on whether the issue would be put off.

The Power Secretary, Mr Anil Razdan, said that the proposed IPO has evinced good responses from institutional investors. Speaking to reporters on the sidelines of an event organised by NTPC Ltd, Mr Razdan said while the markets were choppy, a public float by a fundamentally strong lending organisation like REC could be an answer to the turbulence in the markets.

Scuttling of IPOs

REC’s Chairman and Managing Director, Mr A.K. Lakhina, is currently in the US for roadshows, Mr Shinde said. Weak response from investors had led to three companies —Wockhardt Hospitals, Emaar MGF and SVEC Constructions — pulling out their IPOs from the market over the last one week.

The four-day book building for the IPO of REC is scheduled to open on February 19.

The company is a state-run non-banking financial company that extends credit to power projects primarily in rural areas. IL&FS Investsmart Securities Ltd, ICICI Securities Ltd, and SBI Capital Markets Ltd. are the book running lead managers to the 100 per cent book building public offer.

(This article was published in the Business Line print edition dated February 14, 2008)
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