Our Bureau

New Delhi, Nov. 23

The Cabinet Committee on Economic Affairs on Thursday approved initial public offerings of three State-owned power companies Power Finance Corporation, Power Grid Corporation and Rural Electrification Corporation through fresh issue of shares.

Briefing reporters after the CCEA meeting, the Union Finance Minister, Mr P. Chidambaram, expressed hope that all the three IPOs would hit the market in the last quarter of fiscal 2006-07. The IPO proceeds are to be used by the respective companies for their expansion plans.

In the case of PFC, the number of shares to be issued would be 11,73,16,700, which is equivalent to 10.22 per cent of the post-issue capital of the company.

For PGCIL, the CCEA said that the fresh issuance should be in tranches and should not exceed 24 per cent of the paid-up capital of the company. The first tranche would be 10 per cent, Mr Chidambaram said.

In the case of REC, the IPO would result in issuance of 15.6 crore shares, which is about 20 per cent of equity capital.

Hilton proposal

Meanwhile, the CCEA also approved Hilton International, the US proposal to invest $143 million for a 26 per cent stake in a joint venture company with DLF. The joint venture company would develop Hilton brand of hotels in India.

The CCEA also approved Hilton's proposal to set up a wholly owned subsidiary in India for hotel and real estate activities. An investment of $28.8 million would be made into this subsidiary. As the total foreign investment was more than Rs 600 crore, it required the approval of the CCEA.

The CCEA gave nod to a proposal by Urban Infrastructure Venture Capital Ltd to raise capital up to $450 million from NRIs and other foreign investors by way of foreign investment into an Urban Infrastructure Opportunities Fund with a green shoe option of $90 million for NRIs and foreign investors. The total inflow of foreign investment from the transaction is up to Rs 2,484 crore.

The CCEA also gave its approval to Peninsula Realty Fund to float a venture capital fund that would have two schemes to permit domestic and overseas investors to invest through a special purpose vehicle in construction and real estate.

It permitted the signing of the Protocol amending the air services agreement between India and Switzerland. An official release said the proposed amendments have the potential to spur greater trade, investment, tourism and cultural exchanges between the two countries.

(This article was published in the Business Line print edition dated November 24, 2006)
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