The Telegraph
Since 1st March, 1999
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PFC revives plan to tap market

Calcutta, Sept. 18: The Power Finance Corporation (PFC) has decided to revive its maiden public offer plan and will soon approach the finance ministry in this regard.

The corporation had long been toying with the idea of offloading 10 per cent of its equity through a public offer and return a part of the capital to the central government, its promoter.

But the move suffered a setback after power secretary R. V. Shahi insisted that PFC will have to return the capital at book value and not at par value as proposed by the corporation.

We will make a fresh proposal to the finance ministry. Lets see what happens. We are eager to float the IPO. It is necessary to fund the power sector reforms.

Earlier, the power ministry had prepared a draft cabinet note on PFCs maiden public offer that envisaged returning 50 per cent of PFCs equity amounting to Rs 515 crore.

According to PFC officials, the key to the viability of the corporations offer is the return of a portion of its equity capital at par value. The government-owned PFC has a bloated equity capital of Rs 1,030 crore, which translates into an earnings per share of around Rs 8, thus making it unattractive to potential investors. Therefore, only if the equity is returned at par value, the maiden offer will be financially viable for the corporation.

The book value of PFCs equity is over Rs 2,100 per share, way above the par value of Rs 1,000 per share.

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