| Shahi: More the merrier
New Delhi, Jan. 17: The government has decided to piggyback on a Power Finance Corporation public offering to sell a 5 per cent stake, which could fetch it around Rs 500 crore.
“The government will ride piggyback on the PFC initial public offering to divest 5 per cent stake. The cabinet has approved the proposal,” power secretary R.V. Shahi said on the sidelines of a seminar here today.
After a recent Left-UPA meeting, Chidambaram said divestment was on and the Left have come on board on the issue. PFC is the second state-run company in which the government will sell stake this year.
The Power Finance Corporation will hit the market by May with a 10 per cent float to raise about Rs 1,000 crore. The government wants to sell another 5 per cent of its stake and raise some resources.
PFC funds power projects with long-term capital and is rated as a blue-chip firm although it does not enjoy navratna status.
PFC will be the second power firm to be listed on the bourses. Earlier, NTPC was listed and the government had divested a 5.25 per cent stake in it two years back.
The company had posted a net profit of Rs 470 crore on a total income of Rs 1,563 crore in the first half of this financial year.
During 2004-05, it had reported a net profit of Rs 984 crore on a total income of Rs 3,047 crore. The company has reserves of Rs 5,350 crore, while earnings per share is Rs 4.56.
The finance ministry feels that divestment of small packets of stock in select state-run firms is necessary as money is desperately needed for a host of ambitious social sector projects.
According to the new rules, divestment proceeds are parked in a National Investment Fund and 75 per cent of the proceeds go to social sector projects in education, health and employment, while another 25 per cent are supposed to be spent on reviving sick PSUs.