Rural electrification plans $635m share sale in India
Thursday, 11 June 2009
NEW DELHI, June 10 (Bloomberg): Rural Electrification Corp., a state- owned lender to power projects in India's villages, has sought government approval to raise as much as 30 billion rupees ($635 million) by selling shares to fund the expansion of networks.
The New Delhi-based company may sell 170 million shares, or about 20 per cent of its equity, to institutional investors or launch a follow-on public issue, Hari Das Khunteta, finance director, said by telephone. The government's response is expected in a month, he said.
Prime Minister Manmohan Singh wants to revive stake sales in state-owned companies as stocks rebound after his governing alliance scored the biggest election win in two decades. India, the world's second-fastest growing major economy, plans to spend 280 billion rupees on supplying power to 115,000 villages in the five years to 2012, according to the finance ministry.
The company "needs capital to support its growth plans as it targets to grow its loan book 25 per cent by 2012," said Mangesh Kulkarni, a Mumbai-based analyst at Almondz Global Securities Ltd., who a neutral rating on the stock. "A share sale is a good idea, though a private placement will probably be a better option as it may take less time."
Rural Electrification raised 16.4 billion rupees in its initial offering last year. The stock has more than doubled this year compared with a 57 per cent gain in the benchmark Sensitive Index.
The shares rose as much as 4.8 per cent in Mumbai to 164.85 rupees and were at 160.3 rupees at 12:04 p.m. local time.
The New Delhi-based company may sell 170 million shares, or about 20 per cent of its equity, to institutional investors or launch a follow-on public issue, Hari Das Khunteta, finance director, said by telephone. The government's response is expected in a month, he said.
Prime Minister Manmohan Singh wants to revive stake sales in state-owned companies as stocks rebound after his governing alliance scored the biggest election win in two decades. India, the world's second-fastest growing major economy, plans to spend 280 billion rupees on supplying power to 115,000 villages in the five years to 2012, according to the finance ministry.
The company "needs capital to support its growth plans as it targets to grow its loan book 25 per cent by 2012," said Mangesh Kulkarni, a Mumbai-based analyst at Almondz Global Securities Ltd., who a neutral rating on the stock. "A share sale is a good idea, though a private placement will probably be a better option as it may take less time."
Rural Electrification raised 16.4 billion rupees in its initial offering last year. The stock has more than doubled this year compared with a 57 per cent gain in the benchmark Sensitive Index.
The shares rose as much as 4.8 per cent in Mumbai to 164.85 rupees and were at 160.3 rupees at 12:04 p.m. local time.