Debarati Roy, Bloomberg
Mumbai: Sterlite Industries (India) Ltd, an unit of billionaire Anil Agarwal’s Vedanta Resources Plc., plans to raise as much as $2 billion (Rs8,191 crore) in its first share sale in the U.S. to pay for a new power plant.
Sterlite, India’s largest copper producer, will sell shares that will trade on the New York Stock Exchange, the company said in a filing to the Securities & Exchange Commission.
By building a power plant, Agarwal is starting his second new venture three weeks after agreeing to pay $1.4 billion for 71% of India’s biggest non-state iron-ore exporter. The response to the stock sale may show if he can achieve the goal of becoming one of the world’s top five metals and mining companies.
“Agarwal aims to be a big player in power generation after securing supplies for his metals business,” said Sanjay Makhija, vice president at Mumbai-based Fortune Financial Services Ltd. “We are bullish on the stock and expect the issue to be fully subscribed. Globally, people want to invest in India.”
Vedanta Resources, which owns 72% of Sterlite, last month defeated rivals including Arcelor Mittal to buy Sesa Goa Ltd. The takeover gave the company its first iron ore mine in India, where steel demand is growing at almost twice the global average fuelled by the world’s second-fastest pace of growth.
Sterlite is planning a $1.9 billion, 2,400-megawatt plant in the eastern Orissa state, where Vedanta is building a 1.4 million ton alumina refinery accompanied by a 500,000 tons a year aluminum smelter. Production at one unit of the refinery began in March, according to the share-sale document.
Orissa, which holds a quarter of India’s iron ore and coal deposits, has prompted steelmakers including Arcelor Mittal and Posco to announce ventures in the state. That may give Sterlite bulk users for the proposed power project, which will be built over four years.
“With India’s large coal resources and demand for power relative to supply, this business represents an attractive growth opportunity,” the company said in the sale document.
India’s economic growth of more than 8% in the past four years has caused electricity demand to exceed supply. The nation must add 70,000-megawatt capacity in the next five years to ease a shortage, according to the power ministry. China plans to add 95,000 megawatts this year alone.
Sterlite has built six of its seven power plants that can generate a total 1,046 megawatts.
The company’s shares rose as much as 3.8% to Rs570 before trading at Rs561.7 at 3 pm on the Bombay Stock Exchange. The stock has almost quadrupled in the past two years, mirroring gains in prices of copper and aluminum.
Citigroup Inc, Morgan Stanley & Co., Merrill Lynch & Co. and Nomura Holdings Inc will manage the sale, according to the document.