REC Stake Sale on Wednesday; Government to Get Rs 1,600 Cr

New Delhi: The government will sell a 5 per cent stake in Rural Electrification Corporation (REC) on April 8 to mop up close to Rs 1,600 crore, marking the first disinvestment of the current fiscal year.

Taking the offer for sale (OFS) route, the government will sell over 4.93 crore REC shares.

"The offer shall take place during trading hours on a separate window of the stock exchanges and shall commence on April 8," REC said in a filing to the BSE.

Shares in REC closed at Rs 335.60, down 0.52 per cent over previous close, on the BSE. The government is likely to fix the floor price for the OFS (offer for sale) at a discount to the current market price.

The 5 per cent share sale would fetch about Rs 1,600 crore to the exchequer.

As much as 20 per cent of the offer size would be reserved for retail investors, who can bid for shares worth Rs 2 lakh. They would be offered shares at 5 per cent discount to issue price.

Besides, 25 per cent of the offer would be allotted to mutual funds and insurance companies.

REC would be the first PSU to hit the market in the current fiscal year. The government has budgeted to raise Rs 41,000 crore through minority stake sale in 2015-16.

The disinvestment department has a pipeline of companies to sell minority stake to avoid bunching up of disinvestment towards the end of end of the fiscal year.

"It is not very healthy to bunch stocks towards the end of fiscal because then you cannot watch the market and there is limited depth in market. So one may not get the full worth also. We will not bunching them together," Disinvestment Secretary Aradhana Johri had said earlier.

J M Financial, Morgan Stanley and IL&FS Broking Services are acting as merchant bankers to the issue.

In 2014-15, government had raised about Rs 24,500 crore through disinvestment.