Thursday, December 10, 2009

Jindal Power Plans $2.1 Billion IPO

. Thursday, December 10, 2009

By stockOzone team

In what would be the second biggest initial public offer (IPO), Naveen Jindal-promoted Jindal Power Ltd (JPL) plans to raise up to Rs 10,000 crore ($2.1 Billion) in this financial year.

The board of JPL today decided to raise the money for funding its proposed two thermal power projects and two hydel stations. The company already has a 1,000- megawatt (Mw) pithead merchant power plant in Chhattisgarh.

Reliance Power raised Rs 11,700 crore through an IPO in January 2008 — the biggest so far. ONGC had raised Rs 10,695 crore, but that was a follow-on public offer.

JPL, a subsidiary of Jindal Steel and Power (JSPL) and a part of the $12 billion (about Rs 60,000 crore) OP Jindal Group, is building a 2,400 Mw power plant near its existing project at Raigarh in Chhattisgarh at a cost of Rs 12,000 crore.

Further, it has a memorandum of understanding (MoU) with the government of Jharkhand for a 2,640 Mw power plant at an investment of Rs 13,000 crore.

In the hydro power sector, it had signed MoUs with the government of Arunachal Pradesh to develop 4,000 Mw at Etalin and 500 Mw at Attunli, in joint venture with Hydro Power Development Corporation of Arunachal Pradesh Ltd.

“We have not finalised the amount to be raised through the IPO. But we are trying to get the approval for raising up to Rs 10,000 crore,” said a JSPL top executive.

“Jindal Power will hold an extra ordinary general meeting of the members of the company to obtain their approval for the IPO,” the company said in its statement to Bombay Stock Exchange. The company did not disclose details of the IPO.

At present the company is in talks with a slew of banks to raise debt for the upcoming projects. The Raigarh project would be completed in 2012-13 and the investment would be at a 75:25 debt:equity ratio, Sushil Maroo, joint managing director of JPL, had earlier told Business Standard.

After the global financial market went into a tailspin, power generation companies such as Adani Power, hydropower public sector company NHPC, JSW Energy and India Bulls Power raised Rs 13,400 crore aggregately, showing the confidence of investors in the power sector. As India faced an electricity deficit of 20,000 Mw during peak hours, investors felt power generation would be the next emerging business in the country, said a Mumbai-based analyst.

India is planning to add around 190,000 Mw of generation capacity in the current and next Five-Year Plan periods. The projects under implementation include 65,000 Mw of power, all slated for commissioning in the current Five-Year Plan period ending 2012.

JPL placed orders for boiler, turbines and generators (BTG) worth Rs 5,040 crore with Bharat Heavy Electricals Ltd (BHEL) in December 2008 for the new 4x600 Mw Raigarh project. The company has acquired land for the main plant and water approvals have been received. Development Consultant Pvt Ltd (DCPL) is technical consultant for the project and SBI Capital Markets is the advisor and syndicator for funds, said sources.

Besides, it is in pursuit of several hydro projects in Nepal, Himachal Pradesh and Arunachal Pradesh, and some foreign locations. It is also trying to get into the non-conventional energy projects such as solar energy, said sources in the know.

JSPL shares closed one per cent up at Rs 731.05.

Disclosure: Author does not own any of the stocks discussed here.

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