Friday, February 22, 2008

Rural Electrification Corporation (REC) Subscribed 27.3 times

The IPO of the state-run Rural Electrification Corporation (REC) got subscribed 27.30 times with an overwhelming bidding for 426.2 crore equity shares till 5 pm. The issue closes today for subscription. Bids for 24.08 crore equity shares have received at the cut off price.

The investor confidence in the IPO can be gauged from the response that it has generated across the board. The QIB portion was subscribed by 6.51 times, retail by 0.79 times and HNI 0.75 times till yesterday. Even the employee quota was subscribed 0.71 times on the penultimate day of the IPO.

REC entered the capital markets with a public issue of 156,120,000 Equity Shares of Rs. 10 each through 100% book building process with a price band of Rs 90-Rs 105.

The Issue shall constitute approximately 18.18% of the fully diluted post-issue capital of REC. The Issue closes on February 22, 2008. IL & FS Investsmart Securities Limited, ICICI Securities Limited and SBI Capital Markets Limited are the Book Running Lead Managers for the Issue. The Equity Shares are proposed to be listed on the NSE and the BSE.

The Company proposes to utilize the net proceeds from the fresh issue to augment its capital base to improve its borrowing capacity in order to support the future growth in its assets.

REC is one of the leading public financial institutions in Indian power infrastructure, engaged in the financing and promotion of transmission, distribution and generation projects throughout India.

The government's Eleventh Plan (2008-2012) anticipates a substantial increase in the country's power capacity. The Ministry of Power's data shows that India's power generation system, as on March 31, 2007, had a total installed capacity of 132,330 MW and an additional 78,577MW are required to meet the projected demand during the plan period. Thus, the overall fund requirement by 2012 for the sector has been estimated at a whopping Rs 10,316,000 million.

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