Sterlite Energy (SEL), a subsidiary of the Vedanta firm Sterlite Industries, is in talks with private equity firms and financial investors to sell around 15% in the largest pre-IPO placement in the country.
Citigroup Global Markets and DSP Merrill Lynch are advising Sterlite Energy on the transaction, which is expected to raise more than $1 billion from a clutch of investors.
Sterlite Energy plans to implement around 10,000 MW of power projects across the country. It is keen on projects where the coal supply is available close to the projects.
The company is also planning to bid for some of the ultra mega power projects in the country. Sterlite's move and expectations from its management highlight the rising valuations in the power sector, which has been beset by shortages and plagued by government interference. A yawning demand-supply gap and the fact that the country will need generous addition of electricity in order to keep its economy humming at 9% every year is making investors take big bets on the sector.
Reliance Power, 50% owned by Reliance Energy, recently filed a prospectus for raising around Rs 11,000 crore from the capital market. UBS, which is one of the bankers to the transaction, has estimated RPL's value at Rs 71,800-92,100 crore.
When contacted by ET, Sterlite Industries director (finance) Tarun Jain declined to comment, adding that "the information is speculative in nature". An e-mail query from ET did not elicit any response. On Monday, the stock price of Sterlite Industries, the parent company, rose 5% to close at Rs 1,082.
SEL is planning to invest Rs 40,000 crore in the power sector for building coal-based plants of 10,000 MW capacity by 2012. SEL, which was established to develop, construct and operate power plants, is now seeking to become one of India's leading commercial power generation companies.
Last month, Sterlite Industries had told the Bombay Stock Exchange (BSE) that it was considering "financing options for these projects, including the issuance of equity and incurrence of debt".SEL has already bagged a 2,400 MW pit-head project in Orissa and also signed a memorandum of understanding with the Chhattisgarh government for a couple of other projects. The company needs to raise $2.8 billion for the two projects under implementation at Jharsuguda and Korba.
The second phase of these projects will add another 6,000 MW at an investment of $6 billion.SIL already has a captive generation capacity of 1,350 MW and is adding another 1,400 MW. It has also been allocated coal blocks at Rampia in Orissa along with five other companies.
SEL will get 4.6 million tonnes of coal a year for 30 years, which will be used to generate 1,000 MW. The company, which lost out in the Krishnapatnam ultra mega power project bid, is planning to participate in the forthcoming UMPP bids.Sterlite, which has plans worth Rs 50,000 crore in the metal business, will require uninterrupted supply of power for its aluminium and steel plants. As the company is developing coal mines also, it can enjoy the synergy benefit and operational efficiency through the integration of metal, power and coal businesses.
"The group's diversification into power sector comes in the wake of India's plans to add 78,000 MW in the 11th Five Year plan. This will open tremendous opportunity for power generation companies. As the scope of the business is high, SEL could raise over $1 billion through 20% stake sale," says Asian Markets Securities Kamlesh Kotak.
However, some potential investors are sceptical about the 'huge' valuations in the power sector. "Current valuations are indeed shocking," said a leading PE investors.
Recently, Adani Power raised $227 million from 3i Group, a private equity player, by divesting less than 10% of its stake. Adani Power, which is setting up a 2,640 MW plant, is valued at around Rs 10,000 crore.
Citigroup Global Markets and DSP Merrill Lynch are advising Sterlite Energy on the transaction, which is expected to raise more than $1 billion from a clutch of investors.
Sterlite Energy plans to implement around 10,000 MW of power projects across the country. It is keen on projects where the coal supply is available close to the projects.
The company is also planning to bid for some of the ultra mega power projects in the country. Sterlite's move and expectations from its management highlight the rising valuations in the power sector, which has been beset by shortages and plagued by government interference. A yawning demand-supply gap and the fact that the country will need generous addition of electricity in order to keep its economy humming at 9% every year is making investors take big bets on the sector.
Reliance Power, 50% owned by Reliance Energy, recently filed a prospectus for raising around Rs 11,000 crore from the capital market. UBS, which is one of the bankers to the transaction, has estimated RPL's value at Rs 71,800-92,100 crore.
When contacted by ET, Sterlite Industries director (finance) Tarun Jain declined to comment, adding that "the information is speculative in nature". An e-mail query from ET did not elicit any response. On Monday, the stock price of Sterlite Industries, the parent company, rose 5% to close at Rs 1,082.
SEL is planning to invest Rs 40,000 crore in the power sector for building coal-based plants of 10,000 MW capacity by 2012. SEL, which was established to develop, construct and operate power plants, is now seeking to become one of India's leading commercial power generation companies.
Last month, Sterlite Industries had told the Bombay Stock Exchange (BSE) that it was considering "financing options for these projects, including the issuance of equity and incurrence of debt".SEL has already bagged a 2,400 MW pit-head project in Orissa and also signed a memorandum of understanding with the Chhattisgarh government for a couple of other projects. The company needs to raise $2.8 billion for the two projects under implementation at Jharsuguda and Korba.
The second phase of these projects will add another 6,000 MW at an investment of $6 billion.SIL already has a captive generation capacity of 1,350 MW and is adding another 1,400 MW. It has also been allocated coal blocks at Rampia in Orissa along with five other companies.
SEL will get 4.6 million tonnes of coal a year for 30 years, which will be used to generate 1,000 MW. The company, which lost out in the Krishnapatnam ultra mega power project bid, is planning to participate in the forthcoming UMPP bids.Sterlite, which has plans worth Rs 50,000 crore in the metal business, will require uninterrupted supply of power for its aluminium and steel plants. As the company is developing coal mines also, it can enjoy the synergy benefit and operational efficiency through the integration of metal, power and coal businesses.
"The group's diversification into power sector comes in the wake of India's plans to add 78,000 MW in the 11th Five Year plan. This will open tremendous opportunity for power generation companies. As the scope of the business is high, SEL could raise over $1 billion through 20% stake sale," says Asian Markets Securities Kamlesh Kotak.
However, some potential investors are sceptical about the 'huge' valuations in the power sector. "Current valuations are indeed shocking," said a leading PE investors.
Recently, Adani Power raised $227 million from 3i Group, a private equity player, by divesting less than 10% of its stake. Adani Power, which is setting up a 2,640 MW plant, is valued at around Rs 10,000 crore.
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