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Govt likely to conduct 5% stake sale in REC in 7-10 days

Response from the international roadshows for divestment of REC and PFC has been encouraging…

The Department of Disinvestment (DoD) will likely conduct 5% stake sale in Rural Electrification Corporation (REC) in the next one week to ten days as part of its FY15 disinvestment plan, said sources in the finance ministry and capital markets on conditions of anonymity.

DoD officials on Tuesday met with merchant bankers to decide the timing of the REC and PFC (Power Finance Corporation) offer. The meeting was scheduled to understand investor sentiment from the combined international roadshows of both companies held in the US, UK, and Asia last week. Domestic roadshows may be held later this week, sources said.

FE learns that investors shared positive feedback during the roadshows. The rationale for launching REC ahead of PFC is the buoyancy in secondary markets and to avoid bunching-up of issues, given the fact that PFC has entered blackout period ahead of its quarterly earnings on February 3, explained one person familiar with the matter.

Benchmark indices hit an all-time high on Tuesday. The Sensex rose 2% on Tuesday and gained almost 7% in the last two weeks. REC shares have risen about 5% during the same period, whereas PFC has risen about 9%.

“Feedback from the roadshows have been positive. Investors love the stock and some of them own it. The fundamentals of both the companies are strong and we believe the issues will be successful,” the person said.

The government aims to raise at total of R2,900-3,300 crore from REC and PFC offers. In the case of REC, the government will sell 4.94 crore shares and can fetch R1,600 crore based on current market price. In the case of PFC, the government will sell 6.6 crore shares (5% stake) and may raise R1,900 crore.

The Centre has lined-up MOIL and appointed IDBI Capital Markets and Edelweiss to manage 10% stake sale in the state-owned manganese-ore mining company. The government is re-looking at selling 10% stake in Coal India this fiscal. The CIL deal holds key for the government and its success will mean the Centre will raise half of its FY15 stake sale target.

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