INDIA BUSINESS WORLD - DECEMBER 1st - DECEMBER 15th
- 2007
ESSAR POWER TO SELL 10% TO PE COS FOR $700 M
The Ruia-controlled Essar Power (EPL) is offloading 10% stake to private equity investors to raise up to $700 million. The equity of the company is valued at $7 billion, sources in the know said.
Essar Power, currently operates power plants with a capacity of 1,200 mw, and has drawn up an investment plan of over $4 billion to set up three more projects with cumulative capacity of 3,600 mw. The projects are coming up in Gujarat, Madhya Pradesh and Jharkhand and are expected to be funded on the basis of debt-equity of 3:1. The company has drawn up plans to set up projects of about 6,000 mw capacity.
When contacted, the company officials declined to comment. While company insiders confirmed that Mumbai-based SSKI has been appointed as the merchant banker.
The Indian power sector is attracting a lot interest from international investors. Projects with fuel linkages fetch attractive valuations. As Essar Power has developed capabilities in setting up mega power projects, the investors are eyeing the company as a potential investment target, said industry analysts.
Essar Power has recently placed an order for supply of power plant equipment for two projects on Harbin Power of China for supply of four BTG (Boiler Turbo Generator) packages and other project materials for two mega power projects being set up by Essar in Gujarat and Madhya Pradesh. The company has placed the order valued at $1 billion for the projects.
The Mahan power project in Madhya Pradesh is being set up closer to coal mines. The company has already been allocated a coal mine which is being jointly developed by Essar and Aditya Birla Group. The Jamanagar power plant will use imported coal as fuel and is in the process of tying coal supplies. Essar Power had won a 1,200 mw power project in Gujarat against competitive bidding earlier this year. Essar has also been allocated a coal mines in Jharkhand for setting up a 1200 mw power plant.
Anil Agarwal's Sterlite Energy is also planning to raise almost $1 billion from private equity investors by selling up to 15% stake in a pre-ipo deal.
Recently, Adani Power raised $227 million from the 3i Group, a private equity player, by divesting less than 10% of its stake. Adani Power, which is setting up a 2,640 MW plant, is valued at Rs 10,000 crore.
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