Riding on the booming power sector, Sterlite Industries has decide to hive off its power division into a separate entity, Sterlite Energy, which is likely to enter the capital market in 2008. According to sources, Sterlite Energy will to mop up over Rs 5,000 crore through a public issue.
“The power subsidiary will enter the capital market to fund various projects. This will also help in unlocking the value of the power subsidiary,” the sources said.
“Since the group is diversifying into other sectors, it is looking at an independent profit centres and is raising finances on individual balance sheets rather than at the holding company level,” the sources said. Sterlite Industries, along with Morgan Stanley, are bidding to acquire a 26 per cent stake in state-owned financial institution IFCI.
Sterlite Industries raised $2 billion through American Depository Receipts (ADRs) in May to finance power projects and to buy out the government’s residual stake in Hindustan Zinc and Bharat Aluminum Company (BALCO).
In an announcement to the Bombay Stock Exchange, Sterlite Industries said Sterlite Energy was considering various financing options for these power projects, including issuance of equity and incurrence of debt.
Sterlite is planning to implement various coal-based power projects aggregating to a total capacity of 10,000 MW. The company has also bid for the 4,000 MW power project in Krishnapatnam, Andhra Pradesh. Sources said the company would actively pursue other power projects coming up.
Sterlite has forayed into the commercial energy business by setting up a 2,400 MW greenfield power plant at Jharsuguda, Orissa, at an investment of Rs 10,000 crore.
Recently, Adani Power raised $227 million from the 3i Group, a private equity player, by divesting less than 10 per cent of its stake. Adani Power, which is setting up a 2,640 MW plant, is valued at Rs 10,000 crore. Reliance Power, too, is planning to raise around Rs 12,000 crore through a public issue, valuing the company at around Rs 1,00,000 crore.