“Initially, we shall start with US $300 million. The process that follows will be that we first select a partner for it, make a trust, make a asset management company (AMC), this may take around six months time,” he said. “We shall be contributing to the trust to the extent of 5 per cent,” Singh said.

“Our board meeting held here today has taken a call that we will go for a tender for selecting a partner for this private equity fund,” Singh said. “We specialise in lending to power projects but we do not have expertise in fund management. Therefore, we thought through synergy with partner’s core competence in fund management, we can launch the fund jointly,” he said.

“The tender to select an Indian partner for the fund shall be out soon,” Singh said. “For banking, we are in the process of advertising and are still looking to hire a consultant,” he said.

PFC has entitlement for raising Rs 6,900 crore from Infra bonds, and 5,000 crore from tax-free bonds. So far, it has raised Rs 425 crore from tax-free bonds and Rs 90 crore from Infra bonds in first tranche, Singh said. PFC, as part of Medium Term Note (MTN) programme has proposed to raise US $one billion through External Commercial Borrowings (ECBs) which is expected to get over by December next year, a PFC’s finance department official said.

“Our fund raising for -Infra and Tax free- shall get completed by March 2012 end,” Singh said.
Agencies

Nuclear Power Corporation of India (NPCIL) is building two units of 700 Mw each at Kakrapur atomic plant in Gujarat and Rajasthan atomic power plant. “We are talking to them (NPCIL). We have to decide whether we would fund these projects over 15 years, the way we do in thermal projects”, CMD PFC Satnam Singh told reporters.

NPCIL is expanding its operations and therefore requires capital infusion. “NPCIL was earlier a cash rich company. Now they are seeking funds from lending agencies like us for their projects,” Singh said.

PFC and NPCIL signed a Memorandum of Understanding in October, 2010, for offering financial assistance to NPCIL for its new power projects as well as renovation and refurbishment of life extension projects. Meanwhile, PFC would issue tax-free bonds to raise Rs 5,000 crore of the total borrowing target of Rs 30,000 crore in the current financial year for funding power projects.

“We would borrow Rs 30,000 crore this fiscal. Through tax-free bonds, infrastructure bonds and other means,” Singh added.
Agencies

“Empowered group of Ministers has approved the issue price for PFC’s FPO at the upper cap of the price band i.e. Rs 203 per share with a discount of 5 per cent  to the retail investors and eligible employees,” the company said in a filing to the Bombay Stock Exchange (BSE). The price band for the FPO was fixed at Rs 193-203 per share.

The government is disinvesting 5 per cent of its stake in the public sector company, while the company is raising 15 per cent fresh equity. The government holds about 89 per cent stake in PFC, after divesting 10 per cent through an initial public offering in March, 2007. Last year, PFC was given infrastructure finance company status – a move that enabled the entity to mop up funds through issue of tax-free infrastructure bonds. In April, the board of directors of PFC had approved the Red Herring Prospectus (RHP) for the proposed FPO.

For this fiscal, the government has set a target of mopping up Rs 40,000 crore through disinvestment in public sector entities. In FY11, amount raised through disinvestments stood at more than Rs 22,700 crore.

BofA Merrill Lynch, Goldman Sachs, ICICI Securities and JM Financial are among the book running lead managers for the offer.
Agencies

Last financial year, PFC had sanctioned around Rs 3,000 crore to various projects under the renewable energy segment and disbursed around Rs 1,800 crore during the period. “Loan disbursements to the renewable energy sector will be higher than that seen during the last fiscal as there are sound interests shown by both private and public players in this vertical,” he added.

India has an aggregate installed capacity of 18,655 Mw of renewable energy projects of the estimated potential of 84,776 Mw. Under the Jawaharlal Nehru National Solar Mission, the country aims to produce 20,000 Mw of grid connected solar power by 2022. “We have strategically increased our focus on renewable energy projects, including solar, wind, biomass and small hydro projects to capitalise on the focus on the renewable energy initiatives,” he said.

He also said that the number of projects under the solar mission would come for financial closure in the near future. Barring a separate subsidiary in the renewable energy space, PFC will also enter the debt syndication space. “We have acted as the lead financial institution for several projects. We intend to increase our focus on debt syndication activities in the power sector and are waiting for approval to start operations in this segment,” Nagarajan said.

The infra financing company is also mulling to enter the banking space in future. “We are evaluating various options to enter the banking space. We are in the process of appointing a consultant in this regard,” he said.

PFC has a total of 7 per cent disbursements to private sector, 65 per cent to state sectors and rest to the Central government agencies in FY11. Its project-wise loan assets stood around Rs 99,570 crore in the last financial year.
Agencies

As per the latest data available with the bourses, the FPO was subscribed 9 per cent evening.  Out of the total issue size of 22.95 crore, so far bids have been received for 2.14 crore shares. The price band for the offer has been fixed at Rs 193-203 per share. The offer would close on May 13.

“We expect to get a good response for the FPO,” PFC CMD Satnam Singh had said earlier in the day. The offer comprises issue of about  172,165,005 fresh equity and sale of around 57,388,335 shares by the government, which has 89 per cent stake in the company. PFC is also offering a 5 per cent discount for retail investors and eligible employees.

PFC plans to use the proceeds to mainly boost its capital base. The government plans to mop up Rs 40,000 crore through disinvestment programme in 2011-12.
Agencies

The company plans to come out with an FPO of 22.95 crore shares, comprising a fresh issue of 17.21 crore equities and an offer for sale of 5.73 crore shares. PFC, which finances infrastructure projects within the country, had last month filed draft prospectus with the capital market regulator Sebi. According to sources, the Rs 6,000-crore FPO of the Navratna PSU is expected to open on May 10 and close on May 13.

BofA Merrill Lynch, Goldman Sachs, JM Financial are among the five investment bankers managing the PFC issue. The government currently holds a 89.78 per cent stake in the firm. It had divested a 10 per cent stake through an initial public offer (IPO) in 2007. In February, the Cabinet Committee on Economic Affairs gave its nod to the company to hit the market. The company will infuse 15 per cent fresh equity, while the government will dilute its 5 per cent stake. PFC, which listed itself on the stock exchanges in March 2007, saw its market capitalisation almost doubling to Rs 25,440 crore, from Rs 12,803 crore at the end of March 21, 2011.

Last year, PFC was accorded the infrastructure finance company status, which will enable the company to raise funds through issue of tax-free infrastructure bonds.
Agencies

This would include fresh issue of over 17.21 crore equity shares and an offer for sale of about 5.74 crore equity shares by the government, as per the draft red herring prospectus (DRHP) with Sebi.

BofA Merrill Lynch, Goldman Sachs, JM Financial are among the five investment bankers managing the PFC issue.
Agencies

“The bonds will be issued in one or more tranches up to Rs 5,300 crore,” PFC chairman and managing director Satnam Singh said. The public issue of secured, redeemable, non-convertible debentures of Rs 5,000 face value each will open for subscription on February 24 and close on March 22.

The proceeds of the issue will be used to finance infrastructure projects, Singh said.

The bond issue is under Sec 80CCF of the Income Tax Act, wherein an investor can avail a deduction of up to Rs 20,000 on his taxable income for the current financial year.

The bonds offered by the company will have a fixed rate of interest up to 8.5 per cent  and will be payable on an annual or cumulative basis. The bonds will be offered in maturities of 10 years and 15 years, with a buyback option after five and seven years, respectively. The bonds will be listed on the Bombay Stock Exchange.

East North Interconnection Company Limited, a wholly-owned subsidiary of Sterlite Technologies Limited today announced that it has arranged  of  Rs 700 crore debt for its Ultra Mega Power Transmission Project (UMTP) awarded to the company, last year, a company statement said adding that SBI Caps was the sole arranger for the debt.

The East-North interconnection mega transmission project aims to evacuate power from the North-East and Eastern states to the Northern region of India is the first mega independent power transmission project to be awarded in India.

The project involves establishment of two 400 KV Double Circuit transmission lines that would respectively connect Assam with West Bengal and Bihar   The project has been awarded on a ‘Build, Own, Operate and Maintain’ (BOOM) basis for 22 years which quoted lowest tariff for the project.

East-North Interconnection Company Limited (ENICL) was a special purpose vehicle (SPV) created for the East-North interconnection mega transmission project by the Power Finance Corporation (PFC), which was nodal agency for the project.. On March 31, 2010, STL completed the process of 100 per cent acquisition of ENICL from PFC.

The other two projects under UMTP scheme floated by the power ministry to augment country’s transmission capacity have been bagged by the Anil Dhirubhai Ambani Group (ADAG) company R-Infra.

“As per current valuations PFC FPO may raise close to Rs 7,000 crore,” he said. The market capitalisation of the company stands at Rs 34,203 crore.

The power ministry had sent a proposal for a 15 per cent fresh equity and 5 per cent disinvestment of government stake in the company in November, last year. The government currently holds 89.78 per cent stake in the firm. It had divested a 10 per cent stake through an initial public offer in 2007.

PFC is engaged in funding power generation, transmission and distribution projects and plans to use the funds from the FPO to finance both existing loans, as well as future lending activities. The government, which hopes to raise Rs 40,000 crore through its disinvestment programme this fiscal, has already mopped up close to Rs 20,000 crore through stake sales in PSUs, Satluj Jal Vidyut Nigam, Engineers India, Coal India and Power Grid Corporation.

In another development, the RBI has cleared Power Finance Corporation’s proposal to mop up Rs 6,000 crore through tax-free infrastructure bonds in the current financial year. However, the company expects to mobilise only about Rs 4,000 crore due to limited market appetite.

PFC chairman Satnam Singh said the company received the nod to issue infrastructure bonds on Wednesday. “The first tranche of about Rs 2,000 crore (will be) in February and the balance in March, depending on market appetite,” Singh said. The company is planning to raise the funds with a coupon rate of 7.75 per cent.

Investments of up to Rs 20,000 in infrastructure bonds are exempt from income tax for individuals. This will be in addition to the Rs 100,000 deduction allowed at present for long-term savings such as provident funds, public provident funds and unit-linked insurance plans, among others.

PFC and Rural Electrification Corporation were in July-August last year awarded NBFC-IFC status by the RBI. The status allows them to issue tax free infrastructure bonds.
REC is also looking to raise Rs 3,000 crore through such bonds in this financial year. Infrastructure bond issues by Infrastructure Development Finance Company and L&T Infrastructure in November last year did not receive a good response.
Agencies