State-run Power Grid’s follow-on public offering (FPO) was subscribed about 15 times at the end of the last day today as retail and wealthy investors lapped up the issue on attractive pricing.
The issue’s retail and non-institutional investor categories were subscribed 2.7 times and about 29 times, respectively. The issue got a good response from the company’s employees, with their portion getting fully subscribed.
The demand was so high that the bankers had to extend the issue by an hour to 7:00 pm. There were more than 1.3 million applications. “The excellent response to the issue is on account of the past performance of the company and its future programmes,” said S K Chaturvedi, chairman and managing director of the world’s third-largest transmission utility.
Power Grid plans a capital expenditure of Rs 29,700 crore by March 31, 2012. The qualified institutional buyer (QIB) portion was subscribed 18.52 times, with foreign institutional investors accounting for nearly 60 per cent of the demand. The last day for QIBs was Thursday. The price band was Rs 85-90 with a five per cent discount for retail investors and employees. The company’s stock closed at Rs 99.60 on the Bombay Stock Exchange today.
“The pricing was very attractive. The government had left enough on the table for investors,” said Krishna Kumar Karwa, managing director at Emkay Global Financial Services. “Also, the prospects of the sector are very good,” he added.
All leading broking firms advised clients to subscribe to the issue. “Our post-issue FY12 estimated book value is Rs 51.4 (for Power Grid), which translates into a fair value of Rs 104 per share. Even at the upper end of the band, we believe there is about 15 per cent upside,” said Shankar K and Subhadip Mitra, analysts at Edelweiss Securities.
The stellar performance of Coal India after listing had also boosted the sentiment for government issues, Emkay’s Karwa said.
The success of Coal India and Power Grid’s offerings will help the government easily meet its disinvestment target of Rs 40,000 crore in the financial year, experts say.
After the success of the latest offering, the government has raised about Rs 21,000 crore from selling stake in four companies in this financial year. It plans share sales in Hindustan Copper, Shipping Corporation of India, Manganese Ore India by December this year.
