New Delhi, Nov. 23: The cabinet committee on economic affairs (CCEA) today approved the initial public offerings (IPOs) of three power PSUs — Power Grid Corporation of India, Power Finance Corporation, and Rural Electrification Corporation.

“The government would not sell any of its shares in the companies. However, these firms will issue fresh shares that will bring down the percentage of government stake. It is dilution and not divestment,” finance minister P. Chidambaram said after the CCEA meeting.

PowerGrid’s IPO will not exceed 24 per cent of the paid-up capital in tranches. “The first tranche would be to the extent of 10 per cent of the current paid-up capital,” said Chidambaram.

Power Finance Corporation’s issue would be equivalent to 10.22 per cent of the company’s post-issue paid-up capital. The company would issue 11.74 crore fresh shares.

Rural Electrification Corporation would issue 15.6 crore fresh shares, which would be to the extent of 20 per cent of its paid-up capital. The IPOs are likely to hit the market in the fourth quarter of this fiscal and the price band would be decided by the companies in consultations with merchant bankers.

Chidambaram said the decision to allow IPOs in the three power firms was taken after consultations with the Left parties.

Hilton venture

The CCEA gave the go-ahead to Hilton International Company to invest in a joint venture company to set up the Hilton brand of hotels in the country. Hilton can invest in the joint venture with a foreign equity capital of 26 per cent amounting to Rs 643 crore.