Gujarat Petro plans Rs 5K cr public issue

After a few hiccups, the Gujarat State Petroleum Corporation's (GSPC) much-awaited initial public offer (IPO) is finally making headway. If things go as planned, this could well be the state's largest IPO, with a target to raise over Rs 5,000 crore.

GSPC is in talks with 10 financial institutions including Citibank, UBS, Deutsche Bank, SBI Capital Markets, ICICI Securities and Kotak Mahindra, Gujarat State Financial Services. Of these, four will be shortlisted as merchant bankers and lead manager to raise funds.

"The exact size of the IPO is still being worked out likely to be over Rs 5,000 crore. Most of the IPO proceeds will go for exploration of the Krishna-Godavari (KG) basin project," a senior government official said.

The commercial agreement for the development plan was being readied and GSPC would submit its proposal to Directorate General of Hydrocarbons by the end of this month or in April, the official said.

GSPC has pumped in about Rs 2,000 crore in the last seven months on explorations in the KG basin, sources said.

GSPC's expansion plans include development of the KG-17 well, which is one of the most significant discoveries for the company.

It is for the first time GSPC has struck oil as well as gas in the same well. GSPC had earlier raised Rs 2,500 crore through a seven-year loan arrangement from a consortium of 15 nationalised banks to fund its KG basin project.

The company's debt-free balance sheet has put it in a position to raise money from banks.

The debt was syndicated by the SBI Capital Markets.

GSPC holds 80 per cent equity in the block, while Jubilant Enpro holds 10 per cent and GeoGlobal Resources of Canada and its chairman JP Roy hold 5 per cent each.