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Strategies & Market Trends : India Coffee House -- Ignore unavailable to you. Want to Upgrade?

To: Mohan Marette who wrote (5871)	8/26/1999 8:15:00 AM
From: Mohan Marette	Read Replies (1) \| Respond to of 12475

2 global utilities eye BSES, start dialogue with FIs Company Website. bses.com Ajoy K Das (Fiancial Times CALCUTTA 25 AUGUST TWO west European utilities majors have joined the race for a controlling stake in the Rs 2,500-crore BSES Limited through the open offer route. In preliminary talks with financial institutions, these two companies, whose identity is being kept tightly under wraps, have indicated an offer price range of Rs 400-450 per equity share of BSES. Both the companies have worldwide operations in utilities. The Rs 10 paid-up BSES equity is currently quoting Rs 238 at the Bombay Stock Exchange, although it shed Rs 20 on Wednesday due to an overall slump in stock prices. The Mumbai-based power utility commands a market cap of $730m or Rs 3,146 crore. Highly placed sources in financial institutions have confirmed that they have been approached by merchant bankers representing their principals with the offer for a stake in the company. The sources said that both the utilities have been scouting for an opportunity to make investments in a power generation and distribution company in the country and their merchant bankers had already completed valuation reports on a number of them. A top merchant banker closely associated with the negotiations said that BSES has been independently valued at around $3 billion and the offer price is not too stiff at the current market capitalisation. "We are not in a position to make any comments on the subject at this point of time. It is a matter of confidentiality and adherence to regulations relating to substantial acquisition in a company," said a top brass of ICICI when contacted. "The power sector has been attracting a lot of interest from foreign investors evident from greenfield projects already on. It is only natural that foreign investors would look at acquisitions for entry into this sector," the official added . However, no comments from BSES was available and a faxed questionnaire to the company did not elicit a reply. Merchant bankers involved in the negotiations said that at current market price of Rs 218 and a marketcap of Rs 3,000-odd crore, the power generation and distribution company was highly undervalued. Besides, acquisition of stake through the open offer route will be convenient for any foreign investor as the promoters holding is just about 16 per cent of the total share capital of Rs 137.9 crore. Financial institutions and mutual funds hold 38 per cent, FIIs 20 per cent and the balance 20 per cent by the public. FI sources said that once the formal offer is submitted, the institutional shareholders ? ICICI, UTI, LIC, GIC ? would take a concerted decision based solely on commercial considerations. Official talks with the merchant bankers are expected to get underway early next month. BSES has several large projects in hand including the 495 MW power plant at Palghar, 160 MW plant in Kerala and a 250 MW project in Tamil Nadu. =============== P/E = 7.68 Book Value =Rs 148.11 Closing prices=Rs 234.50 (on NSE) =Rs 231.25 (on BSE)