Mumbai: Power firm JSW Energy is to price its planned IPO at Rs100-115 a share to raise up to $583 million - around half what it had planned to raise before dropping its offer plan last year.
The company, which last year aborted an up to $1 billion IPO, joins a rush of firms looking to raise equity after a vigorous stock market rally since March.
It would be the third-largest IPO from a power producer in India this year, following offerings from state-run NHPC and private-sector utility Adani Power.
Adani Power, NHPC and energy firms Oil India and Indiabulls Power have together raised about $2.8 billion this year, as they seek to expand in Asia’s third-largest economy.
Even though these offerings were strongly subscribed, most made weak market debuts, with analysts blaming high valuations.
Confirming an earlier Reuters story, JSW said retail investors would be offered a Rs5 per share discount in the IPO, which will be launched on Monday.
Retail investors, who are allotted 30% of Indian IPOs, have shown less enthusiasm than institutions in recent listings, and JSW Energy’s move is seen as a tactic to draw more retail investor interest.
“Most of the IPOs have had rich valuations, leaving little on the table for retail investors,” said Ambareesh Baliga, vice president at Karvy Stock Broking. “This is definitely a good move,” he added, referring to the discount.
India suffers from a peak power deficit of about 12%, and power companies are raising funds to expand generating capacity.
Other expected power firm IPOs include a $1.1 billion offer from Sterlite Energy, part of the Vedanta group, and an $850 million offer from Jindal Power, a unit of Jindal Steel & Power Ltd.
JSW Energy, part of the group that runs JSW Steel, has mandated eight arrangers including JM Financial, Kotak Mahindra Capital Co, JPMorgan and Morgan Stanley for the offer, according to a draft prospectus.
The utility, which also makes turbines and generators in a joint venture with Japan’s Toshiba Corp, will primarily use the proceeds to part fund power projects and mining ventures.
JSW Energy, which made a Rs580 crore profit in the year to end-March, has current operational capacity of 995 megawatts and plans to increase total capacity to 3,140 MW by end-2010 and 11,380 MW by 2015.
The company is also involved in power transmission, and plans to foray into power distribution.