Indiabulls Power to raise up to $377 mn in IPO

Indiabulls Power to raise up to $377 mn in IPO

Mumbai: Indian utility Indiabulls Power Ltd said it plans to raise up to Rs17.58 billion ($377 million) from an initial public offering (IPO) of 390.7 million shares that opens next week.

The company on Wednesday fixed a price band of Rs40 to Rs45 for the offering, which opens on 12 October and closes 15 October. The company is selling up 19% f its equity in the offer, which includes a greenshoe option.

A reviving market for IPOs has sparked a flurry of capital raising by power companies since the middle of the year, drawn by rising demand for electricity in a country that faces 12% shortfall during peak hours.

In the past three months, state-run hydropower generator NHPC Ltd raised $1.25 billion and private sector Adani Power collected $630 million in their IPOs.

Indiabulls Power, a unit of Mumbai-based developer Indiabulls Real Estate, is developing five thermal power plants in western and central India, with total capacity of 6,600 megawatts, and will use the issue proceeds to fund two projects.

It expects equity investment of about Rs40 billion for the 1,320 megawatts Amravati Phase I project and 1,335 MW Nashik project, of which it holds liquid funds of Rs20 billion.

“We have the land for the projects and have tied up the debt funds," chief executive Ranjit Gupta told reporters at a news conference. “We expect to benefit from ‘mega-power project’ status for Amravati that would keep taxes low."

The company expects to start generation by mid-2011. It plans to sell 75% of its output through long-term power purchase agreements, and the balance on merchant power basis, he said.

Indiabulls Real Estate currently holds 71.4% in the company. UK-based billionaire L.N. Mittal’s LNM India Internet Ventures holds a 10.7% stake, while private equity firm FIM Ltd holds the remaining 17.9%.

Morgan Stanley India is the lead manager to the issue.

Indian firms have raised about $15 billion through share sales in the past six months, encouraged by a share market that has risen 74% so far in 2009. The BSE benchmark index hit a 16-month high last week.