Govt gives nod to PFC’s FPO, says no to IOC
New Delhi   11-Feb-2011

The Cabinet Committee on Economic Affairs (CCEA) on Thursday approved the follow- on public offering (FPO) of the Power Finance Corp (PFC), which is expected to raise around Rs. 5,732 crore at the current market price of the stock. However, IndianOil’s (IOC) FPO has been put on hold.

According to an official statement, PFC’s public offering will consist of 17,21,65,005 fresh equity shares of Rs. 10 each, which works out to 15 per cent of the pre-issue existing paid-up capital of the company. Another 5,73,88,335 equity shares of Rs. 10 each will be offered, representing disinvestment of the government’s five per cent share of the pre- issue paid up capital of PFC.

The statement said the reservation of equity shares for PFC employees are subject to the limit prescribed for retail investors by the Securities and Exchange Board of India (Sebi), which will not exceed 0.12 per cent of the issue size. A discount of five per cent of the offer price will be given to retail investors and eligible employees.

The exact amount to be raised through the offer, which is likely to hit the markets in the first quarter of next fiscal, will become clear only after the Empowered Group of Ministers (EGoM) decides the offer price.

The government currently holds 89.78 per cent stake in PFC.

However, IOC’s public offering, earlier planned for the first quarter of 2011, has been stalled due to soaring international prices of crude and unfavourable market conditions. It involved a 10 per cent stake sale by the government and an equal number of new shares to be issued by IOC. It was expected to mop up close to Rs. 20,000 crore.

Meanwhile, on Thursday IOC reported an over two-fold jump in its net profit to Rs. 1,634.76 crore for the third quarter ended December 31, as the approval for the government share of the subsidy for selling fuels below the market price came through.

The firm’s net profit jumped 134.7 per cent during the quarter from Rs. 696.59 crore in the year-ago period, IOC chairman S. V. Narasimhan said.