Mumbai: The state-owned power sector lender Rural Electrification's (REC) initial public offer (IPO) was subscribed 1.62 times over within an hour of the start of its book building process on Tuesday.

REC is offering shares in a price band of Rs.90 to Rs.105. The 156.1 million shares on offer will account for 18.2 percent of the lender's post-issue capital. The holding of the government, which fully owns the company, will be reduced to about 81.8 percent.

Investors ordered 333 million shares for at least $750 million, according to data available with the National Stock Exchange.

REC plans to raise Rs.16.4 billion ($411 million) to strengthen capital and improve borrowing capacity, said its share sale document.

The government plans to add 78,577 MW of capacity in the five years to March 2012 to partly bridge a 13-percent shortfall in peak electricity demand.

The interest in the IPO came despite weak market sentiment on concerns of overpriced public offers and a turbulent secondary market.

Earlier this month, three Indian firms withdrew their IPOs on the back of extremely poor response. These included $165-million Wockhardt Hospitals' offer and the $1.6-billion offer by real estate developer Emaar MGF.