India Power Fund to be operationalized by March 2007

India Power Fund, a venture capital fund of Power Finance Corporation, catering to the need of India’s growing power needs will be operationalized by the end of the current financial year. The fund has been in the pipeline since February 2004 when it was announced by the NDA government to meet the shortfall in equity needs for the power sector.

The Indian power sector needs an investment of more than $100 bn to add 68,000 MW of additional generation capacity, besides transmission and distribution network by 2012. Life Insurance Corporation (LIC) is already participating as one of the partners contributing to the fund. The power ministry has sought an income-tax exemption of 20% of the total contribution for five years to the fund as it feels tax break will help mop up resources.

Read The Economic Times for more details.

Power Finance Corporation IPO to begin on Jan 31; other government power companies to follow soon

The UPA Government has started diluting the centre’s stake in major state-owned power companies without resorting to divestment. The Power Finance Corporation (PFC) will offer a 10% additional equity through an Initial Public Offer (IPO) that will open on January 31. The offer would close on February 6. Post offer, the government’s equity in the company will be reduced to 89.78%. The PFC hopes to mobilize Rs. 1000 crores through the first public offer of its 11.73 crore shares through a 100% book building process. The company has fixed a price band of Rs. 73 – 85 per share. Book value has been estimated to be Rs. 67 per share. Enam Financial, ICICI Securities and Kotak Mahindra Capital have been retained as the book running lead managers for the issue.

With the PFC IPO opening shortly, the Government’s move to mobilize funds for power sector has begun. In the next three months, the centre proposes to dilute its stake in three other major power companies by 10% each. The other companies that are in the process of lining up public offers include Power Grid Corporation of India Ltd (PGCIL), National Hydroelectric Power Corporation (NHPC) and North Eastern Electric Power Company (NEEPCO).

Read the article in The Economic Times.