Will part-finance Rs 40,000-cr expansion of oil and power businesses in three-four years.
Essar Group, promoted by the billionaire brothers Shashi and Ravi Ruia, plans to raise $3 billion (Rs 13,800 crore) by listing 25 per cent in Essar Energy, the group’s holding company for power and oil businesses. The group plans to use the proceeds to part-finance an estimated Rs 40,000-crore expansion of the two businesses in the next three-four years.
“The listing, which would be one of the largest by an Indian entity, would give Essar Energy a valuation of $12 billion (Rs 55,000 crore),” said a person familiar with the development. JPMorgan and Deutsche Bank have been appointed to advise the company on the fund-raising, the source added.
When contacted, an Essar Group spokesperson said: “The Essar Group is always looking at a range of different funding options, but has not yet made any specific decision with regard to further financing.”
The group, the second-largest private sector oil company in the country, is already working on expanding its refining capacity to 18 million tonnes from 10.5 million tonnes and funds have been tied up for this. In the next phase of expansion, the capacity will be expanded to 34 million tonnes — a development that will require $4 billion (about Rs 18,400 crore). Besides, the group needs an additional $1 billion (Rs 4,600 crore) for exploration and production of oil and gas in West Bengal and Gujarat.
The group is also enhancing its power generation capacity to 6,000 Mw from 1,200 Mw at present. Funds have been tied up for this expansion, too.
In the next phase of expansion, the group plans to achieve 11,000 Mw of generation capacity with an investment of another $4 billion (Rs 18,400 crore).