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Powergrid aims for IPO next year

13 October 2004 – India’s PowerGrid Corporation is expected to launch an initial public offering (IPO) of its shares next fiscal year, chairman and managing director R P Singh said on Tuesday.

The IPO will be through the disinvestment of government shares, Singh said at a press conference, but declined to indicate the proposed size of the issue.

Singh said PowerGrid had considered an IPO issue this year itself. However, it was decided to hit the market next year as the company was not in need of funds this year. He also said that a further factor was that the Central Electricity Regulatory Commission’s (CERC) tariffs were in the initial stages of implementation.

Central transmission utility PowerGrid’s IPO is the latest blue-chip public sector undertaking (PSU) – state owned companies – announcing the IPO plans. Another power utility National Thermal Power Corporation (NTPC) has already hit the IPO market.

PowerGrid had posted a net profit of Rs 7.4bn ($161.4m) during the fiscal year 2003-04 on a turnover of Rs 27.83bn.

Analysts say that Indian power companies are well placed to attract quality international investors. Merchant banking sources said the Indian power IPOs could be even more attractive than their Asian counterparts since “it is a pure economy play, and there are many global funds which thrive on such play”.