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Retail investors give thumbs up to Power Grid

Share sale issue of the PSU company receives bids 2.4 times the portion reserved for retail investors

The retail portion of Power Grid follow-on issue was subscribed 2.4 times by 4:00 pm on Friday, the last day of the issue. On the National Stock Exchange (NSE) the retail portion was subscribed 1.85 times while on the Bombay Stock Exchange (BSE), retail investors bid for 0.55 times (or 60 per cent) the total 29.34 crore shares on offer.

However, shares reserved for employees of the company were not fully subscribed with bid coming in for just 90 per cent of the 33.69 lakh shares on offer.

Overall the issue was subscribed 14.37 times. The portion reserved for qualified institutional investors (QIBs) was subscribed 18.5 times of the shares on offer (41.91 crore). Subscription for the QIB portion closed on Thursday.

The already listed public sector undertaking company began share sale on Tuesday to raise up to Rs 8,000 crore.

The government has set a price band of Rs 85-90 for the issue, which is a 12-17 per cent discount on 6, November, Friday’s closing. The share price dropped 3.6 per cent on Monday after the announcement of the FPO which will be offered at a 5 per cent discount to retail investors and employees of the company.

Power Grid is the third-largest power transmission company in the world and plans to double the capital expenditure in the 12th five year plan starting April 2012 to Rs 1 lakh crore. During the 11th plan period, the company plans to spend Rs 55,000 crore of which it has already spent Rs 25,400 in the first three years. In 2010-12, it is likely to spend Rs 12,900 crore and the balance in 2011-12.

Power Grid posted a 42 per cent jump in net profit in the quarter ended September 2010 to Rs 650 billion. Goldman Sachs, JPMorgan, SBI Capital Markets and ICICI Securities are lead managers for the issue.

At present, the Union government holds 86.36 per cent of the issued and paid up equity capital of the company. After the Issue, government’s shareholding would drop to 69.42 per cent.