| IFC eyes 5 per cent stake in GSPC Gas | |
| Maulik Pathak / Ahmedabad November 21, 2008, 0:02 IST | |
International Finance Corporation (IFC), the private sector arm of the World Bank, is likely to pick up close to 5 per cent stake in GSPC Gas Company, a subsidiary of Gujarat State Petroleum Corporation (GSPC).
“IFC is aiming to pick up about 4-5 per cent stake in GSPC Gas for an estimated investment of Rs 100-200 crore,” said a source close to the development.
GSPC Gas, which is in the business of distributing natural gas to households and vehicles in Gujarat, has lined up an initial investment of $140 million (approximately Rs 700 crore) for laying new pipelines for gas and building the infrastructure needed for gas distribution in cities. The company may use the IFC fund to partly finance this expenditure.
Confirming its interest in GSPC, an IFC spokesperson said “things are at an initial stage and the matter is yet to be discussed at the board level.”
Officials at GSPC said IFC is carrying out due diligence for the purchase of a stake.
GSPC is the largest shareholder in GSPC Gas with 62 per cent equity. Gujarat State Petronet (GSPL), a subsidiary of GSPC, owns another 36.5 per cent and the remaining 1.5 per cent is owned by seven large gas-consuming companies in Gujarat in the power and fertiliser sectors.
GSPC Gas has plans to spend Rs 8,000 crore over the next few years to expand its distribution network. The company has plans to distribute natural gas in 180 more towns of Gujarat that will cover one-fifth of the state’s population.
IFC financing for GSPC Gas is expected to initiate the process of diluting the 100 per cent government stakeholding nature of the company.
Meanwhile, GSPC’s plans to offer share to the public through an initial public offering has hit a roadblock due the low valuations and sentiments in the markets. GSPC had planned to raise Rs 3,500-4,000 crore through the offer. The company has got permission to dilute up to 20 per cent stake. GSPC is in the process of selling 5 per cent equity stake to financial institutions such as LIC, UTI and SBI Caps.
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