New Delhi, July 13 (PTI): Power Finance Corporation has petitioned the government for returning 50 per cent of the latter’s equity on par, before entering the capital market, in order to improve its valuation and get good premium on the shares in its forthcoming initial public offer.
If the approval is secured, this would result in payment of Rs 515 crore (50 per cent of Rs 1,030 crore paid-up capital) to the government while retaining equity capital of Rs 515 crore, PFC chairman and managing director A. A. Khan said.
“We have written to the ministry of power seeking their approval for implementing the proposed capital restructuring before hitting the capital market,” Khan said, adding that this has been done on the recommendations of report from Morgan Stanley, who were appointed by PFC for this purpose.
Regarding the IPO, Khan said, “We are hoping that the process of IPO will be completed by February 2004. But all depends on the necessary approvals.”
A draft Cabinet note has been prepared which will be moved once power ministry approves the proposal.
PFC has planned to enter the market with Rs 515 crore equity following the restructuring and enhance it by about 10 per cent through the maiden offer in the first tranch.
Morgan Stanley said that such a reduction in equity would not adversely impact the credit rating of PFC while enhancing its valuation and its ability to raise funds from the capital market.