Naveen Jindal: Power pull

Mumbai, Dec. 10: Jindal Power, a subsidiary of Jindal Steel & Power (JSPL), plans to raise up to Rs 10,000 crore through an initial public offering.

The float by the Naveen Jindal-led firm is set to become the country’s second-largest IPO after Anil Ambani’s Reliance Power, which raised Rs 11,700 crore from the market in 2008.

ONGC’s public issue worth Rs 9,500 crore in 2004 is the second biggest at present. DLF’s Rs 9,200-crore IPO in 2007 comes next.

If the Jindals succeed, the top two IPO slots will go to power.

In a communication to stock exchanges today, JSPL said its board had approved the issue, and the proposal would now be placed before the shareholders.

JSPL vice-chairman and managing director Naveen Jindal said, “We will approach Sebi with draft prospectus before the end of this month for an issue, possibly by March next year.”

Jindal Power is planning to expand its capacity by over 8,000MW over the next few years. The company invested Rs 4,500 crore to set up the 1,000MW OP Jindal Super Thermal Power Plant at Raigarh in Chhattisgarh.

The plan is to expand the capacity of the Chhattisgarh unit by setting up a 2,400MW plant at an estimated cost of Rs 12,000 crore.

A memorandum of understanding has also been signed with the Jharkhand government for a 2,640MW thermal plant. In hydroelectricity, the company has signed agreements for projects in Arunachal Pradesh.

The response of investors, particularly retail, towards recent IPOs has been modest.

JSW Energy’s offer, which closed yesterday, saw the portions reserved for retail and non-institutional investors being undersubscribed.

Sajjan Jindal-led JSW Energy had offered a discount of Rs 5 on the offer price to retail investors. However, of the 8,094,6371 shares on offer, bids were received for only 4,582,260 shares.

Non-institutional investors have bid for 1,478,880 shares against the reserved 2,698,2124 shares.

The flotation of Godrej Properties, which opened for subscription on December 9, also met with a tepid response from retail investors though analysts say the issue is overpriced.

Market circles feel an attractive pricing along with strong fundamentals will ensure a good response for an IPO.