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Mumbai, April 8: The $14-billion Ruia-controlled Essar Group plans to raise $2.5 billion by listing Essar Energy, a holding company for the group’s energy and power businesses, on the London Stock Exchange (LSE).
The fund-raising exercise is billed to be London’s largest initial public offering (IPO) since 2006 and the third largest issue by an Indian company after Reliance Power’s IPO and ICICI Bank’s follow-on offering in the United States.
The group, banking on the country’s increasing energy needs, will offload a 20-25 per cent stake in Essar Energy to fund the expansion of its power plants and refinery in India.
“A London listing gives us an excellent platform to showcase the potential of the Indian market to the world, and to give investors a unique, London-listed, liquid vehicle to access and share in the Indian growth story,” said Essar Energy chairman Ravi Ruia.
Essar Energy is incorporated in the UK, and has its registered office in London and its head office in Mauritius. Essar Energy is expected to start roadshows in the next fortnight and may list the company by May. J.P. Morgan Cazenove is the sole financial adviser and sole sponsor for the proposed offer.
Essar Energy’s subsidiary, Essar Oil’s scrip closed 3.2 per cent higher at Rs 150.40 on the Bombay Stock Exchange on Thursday after this announcement. The group, which is in the fray to buy three refineries from Royal Dutch Shell Plc, is not likely to dip into the funds that will be raised from the Essar Energy IPO for these potential acquisitions.
Funds from the LSE listing will be used for growth projects, said a company statement. These include expanding Essar Energy’s installed capacity of power to 11,470 MW, acquisition of coal mines, exploration of oil and natural gas blocks and completion of phase one of its Vadinar refinery.
The group would have invested $ 2 billion in Essar Energy’s business before the listing, the statement added.
Essar Energy is the country’s second largest private power producer, with four power plants with a generation capacity of 1,220 MW.
