The government today set a base price of Rs 203 a share, a 7.8 per cent discount to the current market price, for the follow-on public offer (FPO) of Rural Electrification Corporation Ltd (REC), according to highly-placed sources.
The government-owned power project financier plans to sell 171.7 million shares, including fresh issue of 128.7 million shares, which will result in an equity dilution of 17.39 per cent. The issue opens on February 19 and closes on February 23.
Shares will be allocated to retail and high net-worth individuals at the allotment price, while institutional investors have to bid for their price and quantity, chairman and managing director P Umashankar had said earlier. Of the 17.17 million shares, half will be offered to institutional shareholders via bidding, while not less than 35 per cent of the issue size will be allocated to retail investors.
The REC offer would have both upward and downward revision of bids. The government has been looking at ways to make the share sale of state-run companies attractive under the French Auction route, after the muted response to the recent NTPC issue, which adopted this route. Under the French Auction model for selling shares, institutional buyers are free to bid above a certain floor price.
