INDIA BUSINESS WORLD OCTOBER (1^st - 20^th) 2007
The Month that was ...

RELIANCE POWER TO RAISE $2.5 BILLION

Reliance Power, the Anil Ambani group firm, will raise $2.0-$2.5 billion in the country's largest power sector initial public offering (IPO). Reliance Power, which is implementing a clutch of large power generation projects across the country, will sell 10%-15% to the public and institutions in the coming months to fund various projects, the board of its parent, Reliance Energy (REL), said.

The value of the projects it is implementing is estimated to be over Rs 70,000 crore. "The draft red herring prospectus for the public offer will be filed by Reliance Power with the Securities and Exchange Board of India shortly. Reliance Power is pursuing a number of projects based on gas, coal and hydro power in the country. The proposed IPO is being undertaken to fund the development of the said power projects," REL said in a statement.

Kotak Mahindra, ICICI Securities, JM Financial and Enam Financial are the advisors to the issue. Foreign in-vestment banking firm UBS is also involved.

Reliance Power's issue will be one of the largest in recent times. Realty firm DLF recently raised about Rs 9,187 crore, followed by Reliance Petroleum's Rs 8,100 crore issue. ICICI Bank, the country's second-largest bank, raised Rs 8,898 crore in a follow-on public offering, while National Thermal Power Corporation, the country's largest power producer, raised Rs 5,368 crore in an issue in 2004.

Estimates show that Reliance Power will have a value of about Rs 68,000 crore if the IPO raises about $2.5 billion for a 15% stake. REL, which owns 50% in the company, is valued at about Rs 27,549 crore. REL's 50% stake in Reliance Power alone could be worth more than its current market capitalisation if the IPO happens at the above mentioned valuation.

Some of Reliance Power's projects include the 4,000 mw Sasan ultra mega power project, the two phases of the 1,200 mw Rosa, a 7,000 mw project at Dadri, a 2,400 mw coal-based power project at Shahpur, Maharashtra and 3,000 mw hydro-electric projects in Uttarakhand and the north-east.

Reliance Power will participate in the forthcoming bids for ultra mega power projects in Krishnapatnam (Andhra Pradesh) and Tilaiya (Jharkhand).

"Besides the Sasan and Rosa projects, Reliance Power is believed to be working on power projects totalling 25,000 mw," said company sources.