PFC plans picking up stake in power firms

May 9th, 2011 - 9:27 pm ICT by IANS  

Chennai, May 9 (IANS) After funding power projects, Power Finance Corp (PFC) is now keen on taking equity participation in power companies and funding coal mines, an official said Monday.

“We have mooted a proposal to the ministry of power to invest in equity in power companies. The government has called for some clarifications whether the equity participation will be in private and public sector-promoted power projects or just restricted to public sector-promoted ones,” director (Finance) R. Nagarajan told reporters here.

PFC has invested in equity capital of power exchanges.

Officials termed the proposal on equity investments as a forward linkage and the proposal to fund coal mines as a backward linkage.

“We have funded integrated thermal power projects - power generators owning coal mines. Now we open to fund stand-alone coal mining companies,” said executive director (Entity Appraisal) D. Ravi.

Hitting the market with a follow-on public offer, PFC is hoping to raise anything between Rs.3,200 crore and Rs.3,495 crore. The issue price band is fixed between Rs.193 and Rs.203 per share with a face value of Rs.10.

According to Nagarajan, a 5 percent discount on the issue price will be offered to retail bidders and eligible employees.

The issue opens for subscription Tuesday and closes Thursday for qualified institutional buyers and Friday for others.

Nagarajan said the issue was to augment the company’s capital adequacy ratio (CAR) and for other corporate purposes.

Last fiscal, PFC’s net interest margin was 3.86 percent. The company’s average cost of funds was 8.18 percent, he said.

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