PFC to raise $240 million from Japan, China

New Delhi: State-run Power Finance Corporation (PFC) top brass is conducting roadshows in Japan and China to raise $240 million (Rs1,180 crore) through foreign loans in these markets for funding power projects in India, reports PTI.

PFC is in the process of arranging ECBs (external commercial borrowings) of $240 million, a source close to the development said adding that the company is in talks with Bank of China, Mitsubishi Bank, and Bank of Tokyo.

PFC chairman and managing director Satnam Singh, along with his team, is conducting roadshows in China and Japan for mobilising the resources to meet its loan disbursement targets.

"This resource mobilisation is for funding power projects in the current fiscal," the source added. It is also the company's first ECB in the current fiscal.

In March, this year PFC had raised $300 million from State Bank of India's London branch for funding power generation, transmission and distribution projects in India.

Meanwhile, the company is gearing to up to raise more funds by the way of a follow-on public offer (FPO) by the end of the current fiscal (2010-11).

The board of PFC has approved a proposal for a fresh issue of equity shares along with disinvestment, not exceeding in aggregate 20% of existing paid up share capital of the company, subject to approvals.

The company is likely to raise fresh equity to the tune of 10% and the government may disinvest 10% of its 89.78% stake in the public sector company.

Going by the current market capitalisation of the company, which stands at about Rs38,909 crore, PFC may raise over Rs7,700 crore.

The government had divested 10% stake by way of an initial public offer (IPO) in 2007. After the proposed disinvestments it may go down to about 80%.

PFC is a non-banking financial institution that provides loans for various power projects in generation, transmission, distribution sector as well as for renovation & modernisation (R&M) of existing power projects.

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