The board of PFC has approved equity investments of Rs 1,000 crore in public-sector power companies. The decision was taken at a meeting last week.
Company, which has been a debt financier, sets aside Rs 1,000 cr
NEW DELHI: The board of Power Finance Corporation (PFC) has approved equity investments of Rs 1,000 crore in public-sector power companies. The decision was taken at a meeting last week.
Sources said PFC would not have to take government approval as it’s a navratna company.
PFC, which has largely been a debt financier for power projects and utilities, is now trying to get into equity funding.
The company itself tapped the market through an IPO earlier this year. It’s also planning a venture fund.
It has a small equity presence with a 8% holding, amounting to Rs 12 crore, in Power Trading Corporation, a public-sector power trading company.
Besides, it holds equity in Small is Beautiful Fund, a venture capital fund of KSK Energy Ventures, which invests in power-generation projects, amounting to Rs 20 crore.
Sources said that PFC was planning to pick equity in the initial public offers of Rural Electricity Corporation (REC), PowerGrid Corporation of India Ltd (PGCIL) and National Hydroelectric Power Corporation (NHPC).
"We will take the qualified institutional investor route for the purpose," said a senior PFC executive.
PFC is not picking up equity as a strategic investment but for seeking better returns on its investment.
The government had, in February, granted approval for the IPOs of REC, PGCIL and NHPC.
Both REC and PGCIL have already filed their draft red-herring prospectus with the Securities and Exchange Board of India. The government plans to sell 10% of its equity share in REC. The company would also raise 10% as fresh equity. In the case of PGCIL, the government would offload 5% equity, with the company raising fresh equity of another 10%.
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