Saturday, October 23, 2010

Get prepared for a deluge of IPOs

India's biggest inter-state transmission company Power Grid Corporation of India is set to hit capital markets again with a follow-on public offer on November 9, 2010.

The Board of Directors of the company in a meeting held on October 20, 2010, has approved the red herring prospectus (RHP) for follow on offer of the company. The subscription for FPO will be opening on November 09, 2010 while closing for QIB bidders on November 11, 2010 and for retail & Non-Institutional bidders (including eligible employees bidding in the Employee Reservation Portion) on November 12, 2010.

Power Grid approves Rs 8,000 crore FPO

The company aims to raise Rs 8,000 crore through follow-on offer, reports CNBC-TV18.

The proceeds will be mainly utilised for constructing nine country-wide high capacity power transmission corridors costing USD 13 billion (Rs 58,000 crore), Chaturvedi said.

Earlier, on July 02, 2010, the company has approved the FPO of 20% of existing paid up share capital comprising fresh issue of 10% of existing paid up share capital and offer for sale (Disinvestment) of 10% of existing paid up share capital by Government of India. Post dilution, the government stake would be 76.36% in company.

The company had raised nearly Rs 3,000 crore via IPO in October, 2007, wherein the government had divested 5% stake in the company.

Power Grid Corporation has reported net profit at Rs 651 crore in Q2FY11 as against Rs 460 crore, a growth of 41.52% on year-on-year basis. Total revenue jumped 25.04% to Rs 2,127 crore from Rs 1,701 crore (YoY).

There will be six public issue lined up this fiscal. Earlier in an interview with CNBC-TV18, Divestment Secretary Sumit Bose said Power Grid is the next big FPO in line. He was confident of the Power Grid,Shipping Corporation, Manganese Ore, and Hindustan Copper share sale getting done by March. Bose was however unsure if IOC and ONGC's share sale will happen by March, although he added that the government was trying hard on that front. He informed that the due diligence process was underway for SAIL's FPO.

Bose said that the government will achieve the Rs 40,000 crore divestment target that it has set for itself in FY11. He however added that the government is not aiming to exceed this target. According to him, Rashtriya Ispat Nigam will be the next big PSU IPO.

The next IPO from government will be MOIL. The Steel Secretary, Pradeep Kumar Misra, said that the roadshow for Manganese Ore's IPO would begin by mid-October. “MOIL's pre-roadshow for the IPO will begin around October 20, with the final roadshow happening in the middle of November. The IPO could be launched in November-December,” Mr Misra said.

According to the proposal, the Central Government will sell a 10% stake, while Madhya Pradesh and Maharashtra governments will dilute 5% each in MOIL. Currently, the Centre holds 81.57% in the company, while Maharashtra and Madhya Pradesh have 9.62% and 8.81% stake, respectively.

Investment Advisor, SP Tulsian said, the issue sizes for MOIL, Shipping Corporation, Power Grid and Hindustan Copper would be around Rs 600 crore, Rs 800 crore, Rs 4,000 crore and Rs 1,500 crore, respectively.

He expects follow-on offers of IOC, ONGC and SAIL by January-March 2010. He said the issue sizes for these FPOs would be around Rs 19,000-20,000 crore, Rs 15,000 crore and Rs 18,000 crore, respectively. "Out of this Rs 52,000-53,000 crore, the government will dilute around Rs 35,000 crore worth of equity shares and the rest will be by fresh issue," he said.

Bought to you by


Ingenious Investor

Equity Research Division


Ravina Consulting

No.11 AG Plaza

3rd Cross Kamanahalli

BANGALORE 560084


For Free Stock Advise + Ideas

sowmya@ravinaconsulting.com

Talk / SMS 08105737966


Read - www.ingeniousinvestor.blogspot.com

Follow us - www.twitter.com/smartinvestor