PowerGrid completes hat-trick, share issue subscribed 6.7 times

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SummaryRepeating its success for the third consecutive time, the Rs 7,000-crore follow-on public issue.

Repeating its success for the third consecutive time, the Rs 7,000-crore follow-on public issue (FPO) by Power Grid Corporation of India (PGCIL) closed on Friday with the issue being heavily oversubscribed.

The issue was subscribed 6.7 times by close after it received a thumping response from retail and non-institutional investors, specially on the last day of bidding.

On Friday, the retail book was subscribed 2.02 times, compared to 0.65 times on Thursday. More than 55 crore shares were bid in the retail category as against 27.44 crore shares on offer.

Shares reserved for non-institutional investors, including high net-worth individuals, were subscribed 9.69 times on the last day. The employee category was subscribed 1.2 times.

On Thursday, the last day for institutional investors, the issue was subscribed 4.77 times.

The qualified institutional buyers’ (QIB) category was subscribed 9.1 times with both foreign and domestic institutions participating actively. The QIB book saw bids for 81.80 crore shares as against 39.20 crore shares that were being offered, stock exchange data showed.

Shares of PGCIL closed at R98.90, up R2.75 or 2.86% on Friday, compared to 0.18% gains clocked by benchmark Sensex.

PGCIL first tapped the capital markets with its initial public offering (IPO) in September 2007.

The issue, which had aimed to sell 57.39 crore shares and raise R2,985 crore, was subscribed a whopping 64.82 times, showed stock exchange data.

Subsequently in 2010, the company launched its FPO with an aim to sell 84.17 core shares. The issue was subscribed 14.88 times, with the receiving bids worth R1.11 lakh crore compared with R7,442 crore it was planning to raise.

Experts said the company’s pricing strategy has been one reason for each of the issues getting a strong response. For the current offering, the price band was fixed at R85-90 per share, with a 5% discount offered to retail investors.

“The company is in the fixed annuity business. It is a low beta stock and brings stability as well as consistent returns to the portfolio. Importantly the issue price was attractive and hence was preferred by investors,” said Rikesh Parikh, VP market strategy and product development-equities, Motilal Oswal Financial Services.

Citigroup, ICICI Securities, Kotak Investment Banking, SBI Capital Markets, and UBS Securities are the lead managers to the issue. Out of the R7,000 crore raised by the company, the government’s share is estimated at about R1,660 crore. Post the issue, the government’s shareholding in the company will drop to 57.89% from 69.42%.

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