The government will sell 5% stake in Power Finance Corporation (PFC) through an offer for sale (OFS) route on Monday, according to a stock exchange announcement. The floor price of the issue will be announced on Saturday.
The Centre plans to sell a little over 6.6 crore shares, which will fetch about R1,713 crore at the current market price. Post the offer, the government’s stake will drop to 67.8%. The Centre aims to sell an additional 3% in the power financing company through the CPSE exchange traded fund (ETF) within 12 weeks of the offer, according to the filing.
The PFC offer is the first after the guideline changes by Securities and Exchange Board of India (Sebi) last month. The regulator allowed companies to disclose their offer-for-sale (OFS) plans two banking days in advance instead of two trading days before launching an OFS. The change in rules was introduced to reduce the gap between the disclosure of the OFS and the actual share sale, and limit the scope for the speculators to beat down the share price of the disinvestment-bound PSUs.
PFC will be the second disinvestment for FY16. The government sold 5% stake in Rural Electrification Corp (REC) in April and raised R1,612 crore. The offer was subscribed 5.5 times.
For FY16 the Centre has set a record disinvestment target of R69,500 crore of which R41,000 crore is estimated from stake sale and another R28,500 crore from strategic disinvestment.
To achieve this year’s target, the government created a pool of 16 companies. Earlier this month, the government proposed selling stake in eight PSUs and conduct a follow-on offer in CPSE ETF. In all, the central exchequer has the potential to raise about R46,500 crore based on the current market price.
The Centre has lined-up stake sale in ONGC which may fetch about R13,196 crore at current market rate. Others include IOC (R10,340 cr), NTPC (R5,686 cr), NMDC (R4,570 cr), and BHEL (R2,875 cr), data from the Department of Disinvestment (DoD) website shows.