IPO limelight for Asian power players

Indian firms seen well-placed to attract quality global investors

The Asian power sector is in the global limelight, with a slew of initial public offerings (IPOs) from major power companies in the continent set to hit the market soon.

Analysts said, in this scenario, Indian power companies are well placed to attract quality international investors.

Merchant banking sources said the Indian power IPOs could be even more attractive than their Asian counterparts since "it is a pure economy play, and there are many global funds which thrive on such play".

His point was that the Indian indices do not reflect the economy in a significant way, since major sectors like power and agriculture are largely in the state sector.

With the power companies almost certain to get into the benchmark indices, a whole lot of economy-focussed funds will be attracted to India.

Major IPOs in the pipeline include a $3.43 million IPO from J-Power, Japan's biggest power wholesaler, and India's top power producer, state-owned National Thermal Power Corporation (NTPC), which recently filed for an IPO, expecting to raise more than $1 billion (around Rs 4,500 crore).

China Power is slated to tap the market with a $500 million IPO soon. Thailand has major plans to privatise its two major power utilities, but the plan is currently in a fix due to labour resistance, and South Korea plans to privatise the generation and distribution assets of Korea Electric Power Corporation.

Market sources said Asia is powering its way into most global funds' portfolios and the power sector would emerge as a serious contender for the top spot in terms of inward investments soon.

The power sector in India is all set to attract global attention with the soon to be launched NTPC IPO catapulting it into the big league.

On listing, NTPC will become one of the largest listed companies in terms of market capitalisation in India. Analysts said the NTPC IPO will attract hedge funds, dedicated power sector global funds and high net worth individuals "" all wanting a share of the premier power company in India.

The Japanese power giant J-Power's mega IPO is most likely to add to the lustre of the Indian power giant's IPO, due in the next two weeks, analysts and merchant bankers said.

Merchant banking sources said the J-Power IPO will bring in more dedicated global power funds into the Asian region and generally shift investor attention to the electricity scenario in the Asian region which is generally considered to be a backward region as far as availability and quality is concerned.

Brokers said the NTPC issue will probably see a lot of dedicated power sector funds make a first-time entry into India. The company hopes to mop up around Rs 5,000 crore from the issue. The NTPC IPO bodes well for the capital markets, wealth managers said, adding that investors are looking for profitable avenues for investment.

Large domestic as well as foreign institutions will find it impossible not to have a sizeable chunk of the stock in their portfolio.

Abhay Aima, country head - equities, HDFC Bank, said, " Investors are bullish on the India story and the infrastructure sector is attracting attention." He added that on a stand alone basis India is in a position to attract global attention on its own.

Nilesh Shah, CIO, Pru ICICI Mutual Fund, said, "The reforms process is very important and will play a big part in attracting global attention." After NTPC, the Indian government is planning IPOs for the Power Finance Corporation (PFC), PowerGrid and NHPC.

The power ministry is working on a strategy to offload stakes in public sector companies under its purview through IPOs.

While NTPC issue is scheduled to open on September 23 at around Rs 50 per share, the power ministry is keen to ensure that the Power Finance Corporation's (PFC) float hits the market this financial year.

Subsequently, PowerGrid Corporation and National Hydroelectric Power Corporation (NHPC) are expected come out with IPOs.

NTPC is among the largest thermal power players in the world and also the cheapest producer of power in India.

A senior analyst pointed out that NTPC is the largest power generating company in the country, with approximately 19 per cent of India's total installed capacity.