PowerGrid seeks shareholders nod to raise FII limit to 30%

Siddhartha P. Saikia New Delhi | Updated on November 26, 2013

Co plans to dilute 17% stake through follow-on offer

Power Grid Corporation of India Ltd is targeting foreign investor participation by increasing the shareholding limit for foreign institutional investors to 30 per cent of the paid-up capital from 24 per cent now.

In addition, the public sector player is expanding its borrowing limit to Rs 1.30 lakh crore from Rs 1 lakh crore.

The company is seeking shareholders nod for the proposals through postal ballot.

It said the result would be published on December 27.

Earlier, the PowerGrid board has approved both the proposals on October 23.

Bankers advise

“This (increasing cap for FII shareholding) was advised by our investment bankers. There is increasing trend of FIIs increasing their stakes post-issue,” said one of the directors on the board of PowerGrid.

PowerGrid is looking to offload 17 per cent equity through the stake-sale. This comprises 4 per cent stake dilution by the Union Government and 13 per cent fresh equity issuance by the company. The issue is scheduled to open on December 3.

Five merchant bankers — SBI Capital Markets, Kotak Securities, Citigroup, ICICI Securities and UBS — are advising PowerGrid on its FPO.

“The current FII holding is 17 per cent. There is some headroom before they reach 24 per cent (current limit). Maybe they are expecting decent FII interest in the FPO. The current paid-up capital is Rs 4,629.7 crore,” said Kunal Sheth, Research Analyst (Institutional Equities) at Prabhudas Lilladher. The PowerGrid scrip closed 0.21 per cent lower at Rs 93.95 on Tuesday on the BSE.

At this price, the issue could mop up more than Rs 7,500 crore.

The firm had launched its IPO in October 2007, and an FPO was floated in 2010 at a price of Rs 90 a share.

PowerGrid’s existing borrowing limit is Rs 1 lakh crore.

“In the next two-three years, we need to get more debt for capital expenditure,” said the PowerGrid director.

Published on November 26, 2013

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