PowerGrid FPO subscribed 69% on first day

 
The follow-on-public offer (FPO) of PowerGrid Corporation of India (PGCIL) was subscribed 69 per cent on the opening day on Tuesday. Of the 78.70 crore shares offered for sale, total bids for 54.32 crore shares were received, as per the data available on the bourses.

As many as 72.98 lakh bids came at the cut off price of the issue.

The shares are being offered at a price band of Rs 85-90 apiece and the issue would remain open till December 5 for institutional buyers and December 6 for retail investors.

Shares of PGCIL closed at Rs 93.75, up 0.37 per cent on the BSE.

The sale of 78.70 crore shares, or 17 per cent stake, could fetch around Rs 7,083 crore at the upper end of the price band. The company may garner close to Rs 5,717 crore, while the government may receive around Rs 1,758 crore.

Last month the Cabinet had cleared the FPO of PGCIL, which will comprise 13 per cent fresh equity by the company and 4 per cent stake sale by the central government.

The government is selling 18.51 crore shares in PGCIL, while the company is issuing fresh 60.18 crore shares through the offer. Of the fresh shares, about 2.4 per cent will be reserved for the employees.

As much as 50 per cent of the net issue is allocated to Qualified Institutional Buyers (QIBs), 35 per cent for retail category and 15 per cent for High Network Investors (HNI).

Above 0.38 per cent of the issue is reserved for employees.

Retail category and employees shall be given a discount of 5 per cent on the issue price.

The government holding in the company will come down to 57.89 per cent from the present level of 69.42 per cent.

Citigroup, ICICI Securities, UBS, SBI Caps and Kotak Mahindra are merchant bankers for the FPO.

This is the second follow-on offering from PGCIL, which sold a 10 per cent stake along with a similar stake divested by the government in November 2010 at an issue price of Rs 90 a share.

The company hit the capital market with initial public offering in October 2007.

So far in the current fiscal, the government has raised over Rs 1,300 crore through minority stake sale in PSUs.

It has set a target of Rs 40,000 crore from disinvestment in current fiscal.

PowerGrid plans to utilise proceeds worth over Rs 5,700 crore from follow-on public offer, towards transmission projects and general corporate purposes.

Speaking to reporters, PowerGrid Chairman and Managing Director R N Nayak said the company intends to utilise the net proceeds of the offer to "meet the capital requirements for the implementation of certain identified transmission projects and general corporate purpose".

Merger and acquisition policy in telecom gets EGoM nod

 
The empowered group of ministers ( EGoM) on telecom, headed by Union finance minister P. Chidambaram, on Tuesday cleared the merger and acquisition (M&A) policy for the telecom sector raising the market dominance criterion to 50 per cent of the market share in terms of subscriber base.

In a merger, the resultant entity has to pay market rates for holding spectrum above 4.4 MHz that was allotted to the companies administratively at old rates.

If two entities which are merging hold airwaves purchased through auctions, they will not have to pay market rate for spectrum, sources said, adding that it has also been decided to put a cap on spectrum a final entity can hold in an area.

However, the merging companies will have to comply with the lock-in clause for sale of equity.

The telecom sector's first M&A rules paves ways for consolidation in the Indian telecom market where there are about 12 players including Bharti Airtel, Vodafone, BSNL, Tata Teleservices, Videocon and Aircel.

"The M&A guidelines have been finalised and the quantum of spectrum that will be put up for auction in the 2G band has also been finalised," Telecom Minister Kapil Sibal said after the meeting.

According to sources, the EGoM has approved sale of 403.2 Megahertz of 2G spectrum in 1800 Mhz frequency band, which at the base price finalised by the ministerial panel amounts to about Rs 36,385 crore.

The EGoM in its last meeting had also approved sale of premium spectrum in 900 Mhz band in three metros- Delhi, Mumbai and Kolkata held by licences of Airtel, Vodafone and Loop Mobile that are due to expire in last quarter of 2014.

The total quantum of spectrum getting freed in the three metros is about 46 Mhz, which amounts to about Rs 12,300 crore at the base rate finalised by the EGoM in its last meeting.

Together, the 900 Mhz and 1800 Mhz band airwaves are valued at about Rs 48,685 crore.

The government in the Budget has provisioned about Rs 41,000 crore from spectrum revenue, which included upfront money from auction and various fees levied on airwaves used for commercial mobile communications.

Gold prices down in futures trade on weak global cues

 
Gold prices moved down by 0.31 per cent to Rs 28,739 per 10 gram in futures trade on Tuesday as speculators trimmed their exposures, tracking a weak trend overseas.

At the Multi Commodity Exchange, gold for delivery in February next year eased by Rs 90, or 0.31 per cent, to Rs 28,739 per 10 gram in business turnover of 201 lots. Likewise, the metal for delivery in far-month April 2014 shed Rs 84, or 0.29 per cent, to Rs 28,410 per 10 gm in three lots.

Market analysts said a weak trend in the overseas markets after signs of a strengthening US economy fuelled speculation that the Federal Reserve is ready to slow the pace of its monetary stimulus mainly weighed on the gold prices at futures trade here.

Globally, gold fell 2.5 per cent to $1,218.80 an ounce in New York in previous session.

BSE Sensex down in morning trade on profit booking

 
The BSE benchmark Sensex wiped off its Monday's gains and was trading over 20 points down in morning trade on Tuesday as funds and retail investors booked profits after recent gains.

At 10.16 am, Sensex was down 25.66 points at 20872.35. Similarly, Nifty was down 10.10 points at 6207.75 during the same time.

Brokers said besides profit-booking by participants, a mixed trend at the Asian markets, influenced the sentiment.

The 30-share barometer, which had gained 477.75 points in the previous three sessions, moved down by 49.42 points, or 0.24 per cent, to 20,848.59 in early trade, led by the weakness in banking, FMCG, realty and power sector stocks.

Similarly, the wide-based National Stock Exchange index Nifty, moved down 14.85 points, or 0.24 per cent, to 6,203.00.

In the Asian region, Nikkei at the Japan stock market, was trading 0.59 per cent higher, while Hong Kong's Hang Seng index shed 0.63 per cent in early trade on Tuesday.

The US Dow Jones Industrial Average ended 0.48 per cent down in Monday's trade.

GAIL in talks to acquire stake in Tanzania gas block

 
GAIL (India) Ltd, the country's biggest natural gas distributor, on Tuesday said it is in talks to acquire Ophir Energy's 10 per cent stake in gas blocks in Tanzania.

"We are in talks are irrespective of Singapore's Pavilion Energy reportedly buying half of Ophir's stake. We continue to be in dialogue," GAIL Director (Marketing) Prabhat Singh said on the sidelines of 8th Asia Gas Partnership Summit.

GAIL was keen to buy part of Ophir Energy Plc's remaining 20 per cent stake in blocks 1, 3 and 4, which are estimated to hold an estimated 15 trillion cubic feet (tcf) of gas reserves.

Pavilion last month offered to pay $1.3 billion for a 20 per cent stake in three gas blocks offshore Tanzania in East Africa.

While Singh refused to give details, industry sources said GAIL had put a price of about $600 million for a 10 per cent interest.

Pavilion Energy, established by Singapore's sovereign wealth fund Temasek earlier this year, in a statement last month announced the acquisition saying the transaction is scheduled to be completed in the first quarter of 2014.

The firm said it has "entered into an agreement to purchase 20 per cent interest in Tanzania blocks 1, 3 and 4 from Ophir Energy for a consideration of $1.288 billion."

GAIL is aggressively tying up liquefied natural gas (LNG) supplies to meet rising energy needs of the country.

The first deliveries from Tanzania blocks are scheduled to start in 2020. BG Group is the operator of the three blocks with 60 per cent stake.

With Ophir, GAIL is hoping to follow footsteps of ONGC Videsh Ltd. (OVL) into hyrocarbon-rich Africa. OVL has in two transactions acquired 20 per cent stake in a giant gas block off Mozambique for over $5 billion.

East Africa has come into focus following massive gas discoveries in deep waters off the coast of Mozambique, which neighbours Tanzania.

The region is ideally placed to serve Asian export markets and so has attracted Indian firms that are trying to secure energy for the nation's growing energy needs.

GAIL has tied LNG supplies from the US to Russia and Ophir would have given it the first foothold in Africa.

Ophir, which counts steel tycoon Lakshmi Mittal among its investors, has interests in five blocks in Tanzania. Mittal Investments Sarla holds 4.51 per cent stake in the company.

Besides 40 per cent interest in blocks 1, 3 & 4, Ophir has 80 per cent operating interest in block 7 and a 70 per cent operating interest in East Pande .