Indian power producer Reliance Energy plans an initial public offering for its Reliance Power unit, which contributes about 63% of the company’s revenues.
“Reliance Power Limited is pursuing various gas, coal and hydro power generation projects in different parts of the country. The proposed IPO is being undertaken to fund the development of the said power projects,” the company said in a release Sunday after its board approved the move.
“Reliance Power Limited is pursuing various gas, coal and hydro power generation projects in different parts of the country. The proposed IPO is being undertaken to fund the development of the said power projects,” the company said in a release Sunday after its board approved the move.
Reliance Energy didn’t specify the amount, but media reports pegged it at about $3 billion. That would make for one of the largest ever public offerings by an Indian company. In recent months, India’s ICICI Bank raised $4.9 billion in a follow-on public offering, and real estate business DLF got $2.31 billion in an IPO.
This will be the first time a company in Anil Ambani’s conglomerate will tap the capital markets since the original Reliance split in 2005, a result of feuding between Anil and his brother Mukesh.
Reliance Energy is believed to be restructuring its business into three vertically integrated units: utility, infrastructure--in which it is expanding aggressively--and real estate.
Market reports said the company is likely to offload a 15% stake, but Reliance officials declined to confirm the number. “In recent months, several of the company’s projects have taken off, and the market response to the offering will be very positive,” said Novonil Guha, senior research analyst at the brokerage Prabhudas Lilladher. He has an “outperform” rating on Reliance Energy.
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