Rural Electrification Corporation IPO

Abstract:

The Rural Electrification Corporation IPO was offered with the main objective of raising funds for the providing financial assistances to the electrification projects in the rural areas and power generation.

Rural Electrification Corporation IPO -At a Glance

Rural Electrification Corporation IPO was offered to the public by the Rural Electrification Corporation Ltd (REC), which is a profit making Government Institution. The REC expects the IPO to be listed at a premium. The company plans to spend around ` 3000 crore, for financing electrification projects in rural areas and generation of power. The REC is expected to finance several independent power production projects. The Rural Electrification Corporation IPO expects to raise ` 4,500 crores.

Rural Electrification Corporation Ltd - Overview

The Rural Electrification Corporation Ltd was established under the Companies Act of 1956, in the year 1969. It is a fully owned Public Sector Enterprise of the Central Government of India. The net worth of the company at present is ` 3779 crores. The primary objective of the company is to provide the facilities such as financing and promotion of the electrification projects in the rural areas across India. The REC provides the State Government Departments, State Electricity Boards (SEB), and Rural Electric Cooperatives with finance schemes for assisting them in electrification projects in rural areas. The company also offers loans to the State Power Utilities and State Electricity Boards for investing in rural electrification schemes. The Rural Electrification Corporation Ltd. is at present working on the project of providing electrification to nearly 1 crore houses. In the year 2003 the company paid a dividend of ` 174 crores, after registering a record profit earning of ` 578 crores. The profits of the Rural Electrification Corporation Ltd., is expected to increase by 50 %, which would provide the company with a profit of nearly ` 850 crores.

Rural Electrification Corporation IPO - Facts

• The Rural Electrification Corporation IPO would issue 152,217,000 equity shares, and 3,903,000 equity shares are reserved for the entitled employees.
• The price band of the issue is fixed at ` 90 to ` 105, per equity share of ` 10 each.
• The Book Running Lead Managers for the issue are SBI Capital Markets Limited, ICICI Securities Limited, and IL & FS Investsmart Securities Limited.

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