Thaindian News

Chennai, Feb 15 (IANS) The state-run Rural Electrification Corp, which funds and promotes projects that mainly target the hinterland, proposes to turn into an equity investor in thermal plants and enter distribution in a bid to expand its sphere of activities.
“We are planning to invest 11-26 percent in the equity of power generation companies. We are also looking at thermal power generation companies promoted by the state electricity boards,” a senior official of the company said.

“The flip side of such investment is that we will not be able to see any revenue in the form of dividends during the first five years of the investment, whereas as a lender we will be getting our interest income,” the official told IANS.

The other issue that the state-run financing firm has to look at while taking the equity stakes in government-promoted power project companies is the exit and divestment route, once the projects reach critical mass.

“We will be able to realise higher value for its investment only if the company in which we have invested gets listed in stock markets. Bulk deals or exiting by selling to other partners will not fetch us the real stock value,” the official added.

Venturing into power distribution as a franchisee for another company in North India is also another sphere of activity the company is actively pursuing through its subsidiary.

Meanwhile, Ajeet Agarwal, general manager for the company said, funds to the tune of Rs.1,900 crore had been raised by way of bonds and another Rs.600 crore may be tapped before the end of this fiscal.

The Reserve Bank of India (RBI) has sanctioned $700 million to be raised from external sources, he said, adding: “Our average cost of funds is 7.7 percent.”

The company is also coming out with a public issue of 171,732,000 equity shares at a price that will be decided Feb 18, a day before the opening.