Price band fixed at Rs. 90 to Rs. 105
Mumbai, 7th February 2008 : Rural Electrification Corporation Limited ("REC" or "the Company"), one of the leading public financial institutions in Indian power infrastructure, proposes to enter the Capital Markets on February 19, 2008 with a public issue of 156,120,000 Equity Shares of Rs. 10 each through 100% book building process. The Issue comprises a fresh issue of up to 78,060,000 Equity shares by REC and an offer for sale of up to 78,060,000 Equity Shares by the President of India acting through the Ministry of Power. The net issue to the public will be up to 152,217,000 Equity Shares, after allowing for reservation of up to 3,903,000 Equity Shares for subscription by eligible employees as defined in the Red Herring Prospectus. The Issue shall constitute approximately 18.18% of the fully diluted post-issue capital of REC. The Issue closes on February 22, 2008 and the Price Band has been fixed at Rs 90 to Rs 105 per Equity Share of Rs 10 each. 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 meet the future capital requirements arising out of growth in its assets, primarily its loan and investment portfolio due to the growth of the Indian economy and for other general corporate purposes including meeting the expenses of the Issue. The Company is seeking to strengthen 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. It occupies a key position in the GoI's plans for the growth of the Indian power sector. Since its inception in 1969, the Company's mandate has evolved to permit it to finance all segments of the power sector throughout the country. It provides funding to clients and assist them in formulating and implementing various types of power project-related schemes. Its clients include public sector power utilities at the central and state levels and private sector power utilities. Additionally, it finances power projects for its joint sector clients. It aims to capitalize on the increasing private sector participation in the Indian power sector.
The Company occupies a unique position within the area of rural electrification of India and it currently administer grants and provide loans as the nodal agency for the RGGVY, which is primarily aimed at the electrification of all villages in India. As a public sector undertaking, it has been accorded "Mini Ratna Grade-I" status by the GoI by virtue of its operational efficiency and financial strength, which affords greater operational freedom and autonomy in decision-making. In recognition of its performance and consistent achievement of targets negotiated under the memoranda of understanding that it enter into with the GoI on an annual basis, the GoI has rated its performance as "Excellent" continuously from Fiscal 1994 through Fiscal 2007. REC has also been ranked among the top ten public sector undertakings in India by the Ministry of Heavy Industries and Public Enterprises for Fiscal 2000, Fiscal 2002 and Fiscal 2005.
Domestically, it holds long-term borrowing ratings of "AAA"/Stable from CRISIL Limited, "LAAA" from ICRA Limited and "AAA(ind)" from Fitch, each of which is the highest long-term domestic rating of the respective agency. On an international basis, the Company holds long-term borrowing ratings of "BBB-" and "Baa3" from Fitch and Moody's, respectively, which are on par with sovereign ratings for India.
The President of India, acting through nominees from the MoP, currently holds 100% of the issued and paid up equity capital of our Company. After the Issue, the GoI's shareholding will be 81.82% of the diluted post issue paid up equity capital of our Company. The GoI, acting through the MoP, oversees our operations and has power to appoint Directors to our Board.
Disclaimer
The Company is proposing, subject to market conditions and other considerations, a public issue of the equity shares and has filed its Red Herring Prospectus with the Registrar of Companies, National Capital Territory of Delhi and Haryana. The Red Herring Prospectus is available on the website of SEBI at www.sebi.gov.in and the website of the Book Running Lead Managers at www.investsmart.com, www.icicisecurities.com,and www.sbicaps.com.
This press release does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any equity shares, not shall it or any part of it nor the fact of its distribution form the basis of, or be relied on in connection with, any contract or investment decision.
This press release has been prepared for publication in India and may not be released in the United States. This press release does not constitute an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration under the US Securities Act of 1933, as amended or an exemption therefrom. The issuer or selling security holder has not and does not intend to register any securities under the US Securities Act of 1933, as amended, and does not intend to offer any securities to the public in the United States. The Company will not be registered under the US Investment Company Act of 1940, as amended, and investors will not be entitled to the benefits of that Act. No money, securities or other consideration from any person inside the United States is being solicited and, if sent in response to the information contained in these written materials, will not be accepted. Securities for sale in any jurisdiction, including the United States, and any securities described in this announcement may not be offered or sold in the United States in the absence of registration under the US Securities Act of 1933 or an exemption from registration.
Any potential investor should note that investment in equity shares involves a high degree of risk. For details, see the section titled "Risk Factors" of the Red Herring Prospectus, which has been filed with the Registrar of Companies and is also available on the websites of the BRLMs are set forth above.
For Further information please contact: Manju Madan, Concept PR, 9820045784, 9320045784, 022-22076317 -19
Concept PR