Tuesday, May 3, 2011

PFC FPO - Analysis, Recommendation, Review, Subscription, Allotment, Listing

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Power Finance Corporation (PFC), a state owned company, which provides financial assistance to power sector, has come out with a FPO of 229,553,340 equity shares. The issue comprises a fresh issue of 172,165,005 equity shares by company and an offer for sale of 57,388,335 equity shares by the President of India acting through the Ministry of Power, Government of India. The issue comprises a net issue to the public of 229,277,876 equity shares and a reservation of not more than 275,464 equity shares for subscription by eligible employees.

PFC is a leading financial institution in India focused on the power sector. It established as an integral part of, and continues to play a strategic role in, the GoI’s initiatives for the development of the power sector in India.

This is the first divestment by government in the financial year 2011-12. Money raised through dilution of 5% stake (offer for sale) shall go to government of India. Its stake would be 73.72% post issue.

The FPO shall open on May 10 and shall close on May 12 for QII bidders and on May 13, 2011 for other bidders. The company has fixed the price band at Rs 193 - Rs 203 per share. Retail investors will get 5% discount.

The company intends to utilize the fresh issue proceeds for augmenting capital base to ensure compliance with requisite capital adequacy norms and for future capital requirements.

PFC closed on 3rd May at Rs 223.35, down 3.60% on Bombay Stock Exchange. The company's market capitalisation stands at Rs 25,635.37 crore.

DSP Merrill Lynch Limited, Goldman Sachs (India) Securities Pvt Ltd, ICICI Securities Limited and JM Financial Consultants Pvt Ltd are the book running lead managers to the issue.

We would recommend investors to invest in this FPO with a long term view.

The FPO got very good response from investors and got 3.6 times subscribed at the close of the FPO.

At the close of the FPO,
QII segment got subscribed by 6.92 times
NII segment got subscribed by 1.20 times
Retail segment got subscribed by 2.00 times
Employee reservation segment got subscribed by 0.91 times

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