Bhilwara Energy Ltd (BEL), part of the LNJ Bhilwara Group, proposes to raise $150 million (Rs606 crore) in two tranches by offering stakes to private equity investors.
The funds raised will be used to finance its big push in hydel power generation and plans to enter the commercial production of thermal power.
It will raise $25 million in 2008-09 and $125 million two years later.
“The longer one delays the dilution, the better valuation one gets. We will keep on diluting our stake in BEL till the time our stake does not go below 60%,” said Ravi Jhunjhunwala, chairman, LNJ Bhilwara Group.
The company recently agreed to place equity worth Rs105 crore with Mauritius-based New York Life Investment Management India Fund II, Llc. and WIH Holdings.
Bhilwara Energy is the LNJ Bhilwara Group’s holding company for all its power businesses, which includes majority stakes in Malana Power Co. Ltd and AD Hydro Power Ltd. LNJ Bhilwara Group has hydrel power projects with a combined capacity of 1,350MW.
BEL’s equity is presently held by the LNJ Bhilwara Group of companies including its listed entities, HEG Ltd, which holds 39.13%, and RSWM Ltd, which holds 26.41% equity. The balance is held by other LNJ Bhilwara Group companies and individuals.
The group is the sole bidder for a 335MW project in Arunachal Pradesh and also the highest bidder for two projects with a combined capacity of 340MW in Himachal Pradesh.
“We have also bid for 10 more hydroelectric power projects in Himachal where five projects are above 100MW with the balance below 100MW. The $125 million sum will be raised depending on how fast we implement the Arunachal Pradesh projects,” said Jhunjhunwala.
Commenting on the company’s plans, Manish Makhan, associate director, Fitch Ratings India, said, “LNJ Bhilwara Group had a successful stint with Malana project and that set up their reputation for timely execution of projects and helped them raise resources for their second project.
The group’s game plan is to bag a project, develop it and then divest a part of it to a third party. In my view, it would continue to do that.”
BEL has also entered into talks with some Nepal-based companies for setting up hydroelectric power projects in that country.
“We have submitted expressions of interest (EoIs) and are in negotiations with the Nepal-based companies for projects in the range of 300MW to 400MW,” said Jhunjhunwala.
The Nepal government has already awarded projects below 100MW to these companies. The group is also part of a consortium that includes BC Jindal Group and Facor Group that has bid for a coal block with estimated proven reserves of 450 million tonnes.
Once it is awarded the block, LNJ Bhilwara Group plans to enter the thermal merchant power plant business for the first time and set up a 700-800MW project.
The group had a turnover of Rs2,857 crore and a net profit of Rs134 crore in 2006-07. The contribution of the power sector portfolio to the turnover was Rs200 crore and to net profits was Rs63 crore.