Mumbai: Indian conglomerate Essar Group plans to raise about $2.5 billion to $3 billion by listing its energy and power businesses on the London bourse in late April, tapping new investors to fund its ambitious expansion plans.
The company will sell a 20% stake in the operations, one source said, while another said the company could sell 20-25%. Essar has hired JPMorgan Cazenove and Deutsche Bank to handle the deal, said the sources, who did not wish to be named as they were not authorised to speak to the media.
The offering could become the second-biggest share sale by an Indian firm, ahead of Reliance Power’s $2.9 billion initial public offering in 2008 and private-sector lender ICICI Bank’s $4.6 billion follow-on sale in the United States in 2007.
The sale would help expansion plans at Essar, controlled by billionaire brothers Shashi and Ravi Ruia and whose interests span telecom and energy to steel and shipping.
The group’s energy and power operations are valued at about $12 billion, one of the sources said.
“Essar Group is always looking at a range of different funding options but has not yet made any specific decision with regards to its future financing. The group works with a range of financial advisors to assist the group,” the company said in a statement.
Over the weekend, the group said it signed a deal to buy US coal producer Trinity Coal Partners LLC from US private-equity firm Denham Capital for $600 million.
The deal is part of the company’s strategy to source raw materials for its global steel and power operations.
Trinity Coal will help fuel the company’s North American steel operations, including its Essar Steel Algoma facility in Ontario, Canada.
Essar Oil, a group firm, is in talks with Royal Dutch Shell to buy three European refineries.
The company, which runs a 280,000 barrels-per-day refinery in western India and owns a 50% stake in a Kenyan refinery, is pursuing the deal as part of plans to have a refining capacity of 1 million barrels a day.
In November, Essar Group agreed to buy a majority stake in Dhabi Group’s telecommunication businesses in Uganda and Congo.
Essar is Vodafone’s partner in India’s No. 3 mobile firm, Vodafone Essar. It holds a 33% stake in Vodafone Essar and holds less than 10% in another Indian telecom firm, Loop Mobile.