Files draft red herring prospectus with Sebi.
Action in the booming power sector continues, with the Sajjan Jindal-promoted JSW Energy announcing plans to raise Rs 3,000 crore from the Indian equity market, which recently witnessed two of the largest initial public offers (IPOs) by power firms since the global meltdown.
JSW Energy (JSWEL) today filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (Sebi) to enter the capital market with an IPO of equity shares with a face value of Rs 10 each at a price which would include a premium, aggregating up to Rs 3,000 crore.
The power generator requires close to Rs 14,000 crore to fund its six ongoing power projects, which have a debt requirement of close to Rs 10,000 crore.
“During the time of the downturn, most of the public offerings were put on hold and, now, the market is showing signs of recovery. As the Indian market has faith in the power generation business, arising out of a big opportunity to bridge the huge electricity deficit, power generators have made a beeline to raise funds through equity dilution,” a Mumbai-based industry analyst said.
Indian power companies have raised over Rs 20,000 crore in the last three weeks from domestic banks and global investors. The trend will continue further as financial closures of several projects worth over Rs 70,000 crore with an estimated capacity of 15,000 Megawatt (Mw) are expected to happen this fiscal year.
Two other major power producers — Sterlite Energy and Indiabulls Power — are also planning IPOs in near future.
According to sources, Vedanta Resources subsidiary Sterlite Energy may tap the capital markets in 3-4 months to raise over Rs 3,000 crore. Indiabulls Power is planning to raise over Rs 1,500 crore through its soon-to-be-launched IPO. According to a senior GMR Energy official, the company is yet to take a final call on when to unveil its initial public offer.
Billionaire Gautam Adani-promoted Adani Power had raised Rs 3,020 crore from its IPO early last month, offering 301.6 million shares at Rs 90-100 each, including 52 million shares given to anchor investors before the public issue. The recent IPO of public sector hydro power maker NHPC Ltd was also a big success, as the IPO was over-subscribed 23 times to raise over Rs 6,000 crore.
The issue was also the second-largest IPO in the country so far after Reliance Power, which mobilised above Rs 11,000 crore in January last year.
India is facing a shortage of about 25,000 Mw power during peak hours. There are plans to add close to 78,000 Mw of power during the current five-year plan.
JSWEL, which is planning to become one of the top power producers in the country by 2015 with over 12,000 Mw of installed capacity, is currently setting up a 1,200-Mw power plant at Jaigad in Maharashtra, which is in the final stages of construction.
It is the first independent power producer in Karnataka, with a gas and coal-fired 260-Mw power plant. The company is also executing a 600-Mw thermal power plant at Torangallu near Bellary in Karnataka.
Its pipeline projects include a 1,000-Mw power plant at Junagarh in Gujarat and another, 1,000-Mw lignite-based power plant at Barmer in Rajasthan, besides projects in West Bengal, Jharkhand and Andhra Pradesh. The company has operations and maintenance contract for the captive power plants of JSW Steel.
JSW Energy also has a joint venture with the Maharashtra State Electricity Transmission Company (Maha Transco) to set up a 400-kV transmission system to evacuate power from JSW’s power plant coming up at Jaigad. Moreover, the company is building a power equipment manufacturing unit in Chennai, in a joint venture with the Japanese major, Toshiba.
JSW Energy said the issue, which is to be decided through a 100 per cent book-building process, comprises a net issue of equity shares to the public and a reservation of equity shares for eligible employees. The equity shares are proposed to be listed on the National Stock Exchange and Bombay Stock Exchange.
At least 60 per cent of the net issue will be allocated on a proportionate basis to qualified institutional buyers (QIBs), out of which 5 per cent will be available for allocation on a proportionate basis only to mutual funds. The remainder will be available for allocation on a proportionate basis to all QIBs, including mutual funds.
The company may also consider participation by anchor investors in the QIB portion in accordance with applicable Sebi guidelines.
Further, not less than 10 per cent of the net issue will be available for allocation to non-institutional bidders on a proportionate basis and not less than 30 per cent of the net issue will be available for allocation to retail individual bidders on a proportionate basis.
