Mumbai: City-based JSW Energy Ltd plans to raise as much as $1 billion (Rs3,950 crore) to build generators, driving a record year for initial share sales by Indian power producers, two people familiar with the offer said.
The company will seek regulatory approval this month and complete the sale by March-end, the people said, requesting anonymity before an announcement. Arun Bhatt, a company spokesperson, declined to comment.
Prime Minister Manmohan Singh wants to double investment in power over the five years to 2012. Singh’s spending plan may attract investors to JSW Energy and Reliance Power Ltd, controlled by billionaire Anil Ambani’s Reliance Energy Ltd, which is planning its own share sale.
“There is excitement surrounding this sector and these issues will attract a lot of investors,” said Sandip Sabharwal, chief investment officer at Mumbai-based JM Financial Mutual Fund, which oversees the equivalent of $2.86 billion in assets.
JSW Energy is setting up a 1,000MW lignite-based power plant in Barmer in the western state of Rajasthan and a 1,200MW coal-based plant in Maharashtra, according to its website. The company also plans to set up generators in West Bengal, Jharkhand and Andhra Pradesh.
JM Financial Consultants and Kotak Mahindra Capital Co. are among the banks that will arrange the sale, the people said.
JSW Energy’s offer will raise planned fund raisings by power producers in India to $6 billion, according to people familiar with the plans. Reliance Power may raise as much as $3 billion in the nation’s biggest initial public offering (IPO) and Sterlite Industries India Ltd intends to sell a stake worth as much as $2 billion in its energy unit to build power plants.
India’s government plans to spend Rs6.17 trillion by 2012 to boost generation and upgrade transmission and distribution networks. It has set a target to add 78,577MW generation capacity in the five years to March 2012, according to the Central Electricity Authority’s website. Union finance ministry estimates power shortage is responsible for cutting gross domestic production by one-tenth.
JSW, part of the $8 billion OP Jindal group, has interests in mining, steel, power and oxygen.