Power Grid FPO will hit the market on November 9. The bid closes on November 11 for institutional investors and on November 12 for retail and non-institutional bidders. The company plans to raise 10 per cent fresh equity, while the government is likely to offload 10 per cent of its 86.36 per cent stake in PowerGrid. Besides disinvestment of the government stake, the fresh capital raising would be used for part funding investment requirement of about Rs 58,000 crore of the PSU.
The price band for the FPO is Rs 85-90.
The FPO provides an opportunity to invest in the government-appointed central power transmission utility. It is one of the largest transmission utilities in the world, with more than 50% market share in India. The company has 77,000 circuit km of network and 131 sub-stations with transformation capacity of 89,000 MVA. It has diversified into telecoms and established a telecom network of more than 21,000km across the country. The company also has a robust consultancy business. We believe Power Grid has significant advantages including key exposure to India's transmission sector; the low risk nature of its business, assured ROE, substantial growth potential; and as the central transmission utility, it has been assigned the role of coordinator in the sector. We further believe that Power Grid's leadership position in the sector is likely to remain unchallenged.
We advice to invest in the FPO for long term gains --
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