MUMBAI Dec 11 Jindal Steel & Power (JNSP.BO),
headed by India's richest woman, plans a $2.1 billion IPO of
its power unit, and analysts said while the sector was in
demand pricing still had to leave something on the table for
The offering by Jindal Power would be India's
second-largest IPO, trailing only Reliance Power's (RPOL.BO)
offering to raise $3 billion in early 2008, and follows a slew
of utilities that have in recent months tapped the stock
Electricity-generation firms are seeking funds to expand
and bridge a crippling power gap in Asia's third-largest
economy, and a rally of more than 75 percent in the benchmark
index this year has encouraged them to flock to the market.
"This is a very large amount. The fund raising seems to be
based on plans for future projects," Rupesh Sankhe, a
power-sector analyst at Angel Broking.
"The response will depend mainly on the pricing to give a
comfort factor to investors," he said.
Jindal Steel & Power said on Thursday it would seek
shareholder approval to raise up to 100 billion rupees for
Jindal Power. The IPO is expected to hit the market in early
The company, part of the sprawling business interests of
the Jindal family, reportedly plans to more than triple
capacity to 3,400 megawatts from 1,000 MW at a cost of $2.8
Jindal Steel is headed by matriarch Savitri Jindal, who
last month was listed by Forbes magazine as India's richest
woman with a fortune estimated at $12 billion. Her wealth has
grown on a near four-fold jump in Jindal Steel's market value
Also a legislator in the north Indian state of Haryana, she
took over as chairperson after her husband O.P. Jindal, once
Haryana's power minister, died in a helicopter crash in 2005.
The company is run by their son Naveen Jindal, who is also
a member of the ruling Congress party in the national
Jindal Power's IPO plans closely follows a public offer by
JSW Energy, part of the group that runs India's third-largest
steel maker JSW Steel (JSTL.BO), which is headed by Naveen's
elder brother Sajjan Jindal.
That IPO, to raise a maximum of $583 million, was covered
1.7 times as institutional investors more than made up for a
shortfall in retail demand.
Energy firms Adani Power (ADAN.BO), NHPC (NHPC.BO), Oil
India (OILI.BO) and Indiabulls Power INDP.BO have together
raised about $2.8 billion since late July, capitalising on
investor interest as India seeks to achieve energy security and
cover a 14 percent peak-hour power deficit.
The NHPC, Adani and Indiabulls Power IPOs were strongly
subscribed, but this has not translated into market
performance, with all three firms currently trading below their
issue price. "This seems to be a sentiment-driven process
where companies think there is so much shortage of power, so
people will pay any price," said Rakesh Rawal, head of private
wealth management at Anand Rathi Financial. "Yes, there is a
massive shortage, but valuations have been just too high."
($1=46.6 Indian Rupees)
(Editing by John Mair)