NEW DELHI: Maharashtra State Electricity Transmission Company Ltd, also known as Mahatransco, is looking to raise up to Rs 10,000 crore (around $1 billion) through an initial public offering (IPO), sources told Moneycontrol.
Mahatransco’s IPO will be the first such initial share sale by a state government owned transmission company.
The proposed transaction is still at a preliminary stage as the company is in the process of appointing investment banks and legal counsel. The final offer size and structure will be determined closer to the filing of the draft offer documents, the people said.
“The IPO is likely to be done at a valuation of around Rs 40,000 crore to Rs 50,000 crore,” said one of the people cited above.
The IPO could be a combination of fresh shares issued by Mahatransco and an offer for sale by its parent, MSEB Holding Company Ltd.
Moneycontrol was the first to report that the state-owned power transmission utility had invited bids from merchant bankers to manage the proposed IPO.
Emails sent by Moneycontrol to Mahatransco did not elicit any response.
With its move to appoint advisers, Mahatransco joins Maharashtra State Electricity Distribution Co Ltd (Mahavitaran), which recently appointed six investment banks for an IPO that could see the company raise between $500 million and $1 billion. The two entities will join a select group of companies promoted by state governments that are traded on Indian stock exchanges. These include Gujarat Energy, Gujarat Alkalies and Chemicals, Gujarat Mineral Development Corporation, Tamil Nadu Newsprint and Papers, Punjab Communications and Jammu & Kashmir Bank.
While the Centre owned utilities such as NTPC, NHPC, PowerGrid trade on the stock exchanges, listed state-owned electricity utilities are rare.
Gujarat Industries Power Company is engaged in power generation, while no state government-owned electricity transmission or distribution company is listed. Mahatransco and Mahavitaran could therefore become the first listed state-owned transmission utility and power distribution company, respectively.
According to the request for proposal (RFP), the company may select six merchant bankers, though it has retained the discretion to appoint a smaller or larger syndicate.
Mahatransco has separately invited proposals from law firms to act as legal counsel and the selling shareholder, as well as counsel to the merchant bankers.
Mahatransco was created following the restructuring of the erstwhile Maharashtra State Electricity Board and is wholly owned by MSEB Holding Company. It operates as Maharashtra’s state transmission utility, carrying electricity from generating stations to distribution companies and large consumers.
The company owns and maintains 52,807 circuit kilometres of transmission lines and 760 extra-high-voltage substations across Maharashtra, making it one of India’s largest state transmission utilities. It also plans and coordinates the state’s intra-state transmission network and plays a key role in connecting renewable-energy projects to the grid.
