The Ruias-controlled Essar Group on Thursday launched the initial public offering of shares of its energy and power businesses with strong early indications that the biggest overseas listing by an Indian firm will have a market value of $10 billion or possibly more.
The London Stock Exchange offer by Essar Energy to raise about $2.5 billion (Rs 11,140 crore) fixed a price band of between 450 pence to 550 pence per share, banking sources said on Thursday.
“At this price band, the valuation of the company will be in the range of $9.5bn-$11bn (Rs 42,332 crore to Rs 49,000 crore) on listing,” said a source who did not wish to be identified.
The Essar group is selling a 20-25 per cent stake in Essar Energy to institutions as it looks to tap new investors to fund its ambitious expansion plans that includes expanding its existing power capacity from 1,220 mw to over 11,470 mw besides acquisition of coal mines and the development and exploration of the 14 oil and gas blocks under its fold.
The group will retain a minimum of 75 per cent of Essar Energy’s issued share capital.
JPMorgan Cazenove and Deutsche Bank are the joint global coordinators of the terms show JP Morgan Cazenove is the sole financial adviser for the offer, while it and Deutsche Bank are joint bookrunners.
The offering to institutions would help expansion plans at Essar, controlled by billionaire brothers Shashi and Ravi Ruia and whose interests span telecoms and energy to steel and shipping.
After the sale, Essar Energy will be listed on the London Stock Exchange and will be considered for inclusion in the FTSE 100 index, the company has said previously.
Essar Energy is incorporated in the UK, and has its registered office in London and its head office in Mauritius. Ravi Ruia, the vice chairman of the group, will move to London to spearhead the global business of the group, two sources with direct knowledge of the matter have told Reuters earlier. Prashant Ruia will be the vice chairman of Essar Energy.
Naresh Nayyar will be the chief executive officer of the company.