State-run Power Finance Corporation (PFC) on Thursday said it has appointed four merchant bankers - Goldman Sachs, JM Financial, DSP Merill Lynch and ICICI Securities - to manage the Rs 5,600 crore (Rs 56 billion) follow-on public offer.
"Goldman Sachs, JM Financial, DSP Merill Lynch and ICICI Securities have been chosen to handle PFC's follow on public offer (FPO)," PFC Chairman and Managing Director Satnam Singh told reporters here.
Earlier this month, the Cabinet Committee on Economic Affairs had approved the FPO of PFC. The company will also infuse 15 per cent fresh equity by issuing 17,21,65,005 shares of Rs 10.
The offer would comprise 5 per cent disinvestment of the government's share in PFC through putting 5,73,88,335 crore shares of Rs 10 on sale. At the current market price, the issue is likely to fetch Rs 5,656 crore (Rs 56.56 billion).
When asked about the company's plan to enter the capital capital market, Singh said, "we are still working on the Draft Red Herring Prospectus (DRHP) and the FPO is likely to hit the markets in the first quarter of the next financial year."
The government holds 89.78 per cent stake in the public sector company. The market capitalisation of PFC at present stands at Rs 28,854 crore (Rs 288.54 billion).
The company had earlier divested 10 per cent stake through an initial public offering (IPO) in 2007. After the proposed FPO, government's stake may go down to about 85 per cent.
The reservation of equity shares for PFC employees is subject to the limit prescribed for retail investors by SEBI, which will not exceed 0.12 per cent of the issue size.
A discount of 5 per cent of offer price will be given to retail individual investors and eligible employees.
The public offer would help PFC to meet the eligibility requirement of maintaining a CRAR (Capital to Risk Assets Ratio) of 15 per cent for industrial finance company status.
The FPO will also enhance equity base of the company to enable it to meet the growing future investment needs of the power sector.
Besides, Singh said the company's board has given approval to set up PFC Capital Services Ltd into a separate subsidiary, which will focus on advising merger and acquisition.
PFC is a non-banking financial institution that provides loans for various power projects in generation, transmission and distribution segments as well as for renovation & modernisation (R&M) of the existing power projects.
The government has set a target of raising Rs 40,000 crore (Rs 400 billion) from disinvestment this fiscal, against Rs 25,000 crore (Rs 250 billion) last fiscal.
