China Light and Power mulls listing of Indian subsidiary

China Light and Power mulls listing of Indian subsidiary

Mumbai: Hong Kong-headquartered utility CLP Holdings Ltd is “actively considering" a plan to list its Indian subsidiary CLP Power India Pvt. Ltd in the Indian stock markets, a top company official said.

A domestic listing of CLP, better known as China Light and Power, should be seen in the context of the geopolitical fissures between India and China.

“We would like to create an Indian identity and we are sensitive to the fact that our name has China in it" CLP’s chief executive officer Andrew Brandler told Mint in an interview.

Brandler added that CLP is flush with funds and is investing $8 billion (around Rs37,000 crore) in Hong Kong, where it already accounts for 80% of power generation capacity. The planned share sale in India is thus not merely to raise capital but to change perceptions.

“We would like to be seen as an Indian company with a strong foreign parent to support Indian shareholders, an Indian management and funded by Indian banks," he added.

The listing plan is still on the drawing board and CLP has not yet sought regulatory approval.

Brandler said CLP has the capacity to list right away, but bankers would like to see a pipeline of projects. The company would also have to look at its corporate structure and governance issues before listing, as many of its projects in India are being implemented by separate entities, he added.

The utility plans to invest Rs10,000 crore to generate 2,321MW power in India.

The firm runs a gas-fired 655MW power plant through subsidiary Gujarat Paguthan Energy Corp. Pvt. Ltd, which it wants to expand by 1,000MW. It is also involved in a 1,320MW coal-based power plant in Jhajjar, Haryana, and has plans to generate 246MW of power from wind mills. “We want to double this capacity in five years," said Brandler.

India needs to generate 92,000MW of extra power to meet the Planning Commission’s five-year target to 2012.

“We will invest Rs3,000 crore as equity and borrow the rest from Indian lenders," Rajiv Mishra, CLP’s India managing director, said. “We have also bid for some of the tenders to transmit and distribute power in various states with joint venture (JV) partners," Brandler added.

“We have not seen many multinational utility companies successful in India," R. Subramaniam, vice-president, Avalon Global Research, a consulting firm, said. Dabhol Power Project, a 2,184MW plant in Maharashtra, is yet to become commercially feasible and AES Corp., an American utility company, has had rough time after it acquired a 49% stake in Orissa Power Generation Corp. Ltd.

CLP’s target is achievable if its projects are “well conceptualized", said Subramaniam, who advises private equity investors on investments in power projects.

CLP’s has a strong presence in Asia-Pacific countries such as Hong Kong, China, Australia, Taiwan and India. It generates power using fuels such as nuclear, coal and gas. CLP will operate in India as an independent entity, unlike its operations in other Asia-Pacific markets, where it built power plants through JVs.

However, in recent bids to manage transmission networks in India, CLP is partnering state government entities.

“We will have a diversified portfolio of solar, hydel, coal, gas, transmission and eventually distribution," Brandler said. “This is part of a 20-year vision to grow in the fastest-growing electricity market."

But CLP is not eager to build nuclear power plants in India in view of the sensitivities of it being a Chinese company. CLP is a conservative firm and has shied away from bidding for ultra mega power projects offered by the Centre. “These projects were too big and risks are higher," Brandler said.