The big-ticket IPO offerings from the power sector may face hiccups following objections by market regulator Securities and Exchange Board of India (Sebi) over non-compliance of Clause 49 of listing norms. Under the clause, companies are mandatorily required to appoint independent directors on their boards.
Power Grid Corp (PGCIL) and National Hydroelectric Power Corp (NHPC) are yet to appoint the required number of independent directors. Sources say Sebi is unlikely to clear their IPO applications unless the companies comply with the requirements. Both the companies, which have submitted their draft red herring prospectuses, were planning to come out with IPOs by June. Government sources said Sebi has already indicated that it was not in favour of clearing the IPOs without the companies appointing independent directors.
However, officials of the two companies are confident the glitches would be sorted out. Denying the possibility of its IPO being put on hold, PowerGrid CMD RP Singh said: “This is speculation. The government is processing the appointments.”
NHPC CMD SK Garg was unavailable for comment. Sources said the names recommended for appointment as independent directors by the department of public sector enterprises had been approved by the power minister and sent to the appointments committee of Cabinet (ACC) two months ago. The appointments have yet to be cleared.
Senior power ministry officials said the appointments are likely to be cleared within the week. The companies are scheduled to have a preliminary meeting with Sebi early next week, and the issue of independent directors is likely to be raised at the meeting. A senior power ministry official said the companies still had time to ensure the appointments were made.
PowerGrid, which filed its draft red herring prospectus in late April, proposes to issue 10% fresh equity and the government will piggyback to offload 5% stake. The transmission major has a paid-up capital of Rs 3,800 crore. The public offer of 15% would raise at least Rs 570 crore. The company plans to investment Rs 6,500 crore in the current fiscal and Rs 55,000 crore in the 11th Plan period (2007-2012).
The proceeds from the 10% fresh equity offer would be retained by the company to part-finance upcoming projects, while a portion from the 5% disinvestment will go to the government. PGCIL posted net profit of Rs 799 crore for 2006-07. Over the next five years, the company plans to increase the capacity of its inter-regional power transmission capacity to 37,000 mw from about 12,000 mw at present.
NHPC had filed its draft red herring prospectus on April 2. The company is planning a public issue of 1,676,049,945 equity shares of Rs 10 each for cash at a price to be decided through 100% book building process. The issue comprises a fresh issue of up to 1,117,366,630 equity shares by NHPC and an offer for sale of up to 558,683,315 shares of the government.
The issue comprises a net issue to the public of up to 1,649,511,945 equity shares and a reservation of up to 26,538,000 shares for subscription by eligible employees at the issue price. The issue will constitute nearly 13.64% of the fully diluted post-issue capital of NHPC.
Power Grid Corp (PGCIL) and National Hydroelectric Power Corp (NHPC) are yet to appoint the required number of independent directors. Sources say Sebi is unlikely to clear their IPO applications unless the companies comply with the requirements. Both the companies, which have submitted their draft red herring prospectuses, were planning to come out with IPOs by June. Government sources said Sebi has already indicated that it was not in favour of clearing the IPOs without the companies appointing independent directors.
NHPC CMD SK Garg was unavailable for comment. Sources said the names recommended for appointment as independent directors by the department of public sector enterprises had been approved by the power minister and sent to the appointments committee of Cabinet (ACC) two months ago. The appointments have yet to be cleared.
Senior power ministry officials said the appointments are likely to be cleared within the week. The companies are scheduled to have a preliminary meeting with Sebi early next week, and the issue of independent directors is likely to be raised at the meeting. A senior power ministry official said the companies still had time to ensure the appointments were made.
PowerGrid, which filed its draft red herring prospectus in late April, proposes to issue 10% fresh equity and the government will piggyback to offload 5% stake. The transmission major has a paid-up capital of Rs 3,800 crore. The public offer of 15% would raise at least Rs 570 crore. The company plans to investment Rs 6,500 crore in the current fiscal and Rs 55,000 crore in the 11th Plan period (2007-2012).
The proceeds from the 10% fresh equity offer would be retained by the company to part-finance upcoming projects, while a portion from the 5% disinvestment will go to the government. PGCIL posted net profit of Rs 799 crore for 2006-07. Over the next five years, the company plans to increase the capacity of its inter-regional power transmission capacity to 37,000 mw from about 12,000 mw at present.
NHPC had filed its draft red herring prospectus on April 2. The company is planning a public issue of 1,676,049,945 equity shares of Rs 10 each for cash at a price to be decided through 100% book building process. The issue comprises a fresh issue of up to 1,117,366,630 equity shares by NHPC and an offer for sale of up to 558,683,315 shares of the government.
The issue comprises a net issue to the public of up to 1,649,511,945 equity shares and a reservation of up to 26,538,000 shares for subscription by eligible employees at the issue price. The issue will constitute nearly 13.64% of the fully diluted post-issue capital of NHPC.
