An initial public offer (IPO) of Adani Power Ltd, a company set up by the promoters of Mundra Port and SEZ Ltd, would be the first large-sized public issue in nearly one and a half year that would test the investor appetite in a weak market.
Adani Power’s IPO, likely to be priced around Rs 100 per share to raise around Rs 3,000 crore, could also become the first issue to have anchor investors allowed by the Securities and Exchange Board of India (SEBI) last month.
According to VK Bansal, vice chairman & managing director, Morgan Stanley India, the price band of the IPO would be lower than Rs 111.50 per share, the price at which the company has made a pre-IPO placement of shares for Rs 300 crore to Capital Trade & Investment Private Ltd, a part of the promoter group firm Adani Enterprise Ltd.
Adani Power’s IPO, which opens on July 28, would be the first large public issue after Reliance Power’s IPO in January 2008, which was the largest ever public issue in the country having mobilised Rs 10,123 crore.
The year 2009 has not seen many public issues of equity shares as the market has been gripped by a bear phase ever since the global credit squeeze started in July 2007, which led to a global recession.
In 2008, the total funds raised via public issues amounted to Rs 16,927 crore, down 63 per cent from Rs 45,137 crore in 2007.
Adani Power is building four thermal power projects with combined installed capacity of 6,600 MW at Mundra in Gujarat and at Tiroda in Maharashtra. It proposes to utilise the proceeds of the IPO to complete the four projects plus to add another 3,300 MW of capacity to raise the total capacity to 9,900 MW.
Adani Power has already entered into power purchase agreements with state electricity distribution company of Maharashtra, Gujarat and Haryana for selling the electricity generated. The average price at which Adani Power would sell power the distribution companies is Rs 2.75 per kilowatt per hour, said Ameet Desai, a director of the company.