Rural Electrification Corporation (REC) would be the next public sector company on the block, in the government’s disinvestment programme.
The Cabinet Committee on Economic Affairs (CCEA) on Thursday approved the proposal for a 5 per cent divestment of government equity in REC, and another 15 per cent issue of fresh equity through a follow-on public offer.
At the current price of Rs 197.30 per share, the follow-on offer is likely to be in the size of Rs 3,400 crore.
The government is expected to raise Rs 850 crore through the equity divestment. Its holding will come down to 66.81 per cent on the expanded capital base.
“With an expanded capital base, REC’s capacity to lend will go up,” said H.D.Khunteta, REC’s director (finance).
Post-issue, the company’s net worth will go up to Rs 11,000 crore, against Rs 8,150 crore at present.
The government currently holds 81.82 per cent stake in the company, which has a market capitalisation of more than Rs 16,000 crore. The company will issue 12 crore fresh shares.
Home minister P. Chidambaram said process would happen within the 2009-10 fiscal.