The Essar Group, which announced the acquisition of US-based Trinity Coal for $600 million (around Rs 2,760 crore) on Saturday, plans to raise about $2.5 billion to $3 billion by listing its energy and power businesses on the London bourse in late April, tapping new investors to fund its ambitious expansion plans.
The company will sell a 20% stake in its operations, one source said, while another said the company could sell 20-25%. Essar has hired JPMorgan Cazenove and Deutsche Bank to handle the deal, said the source.
The offering could become the second-biggest share sale by an Indian firm, ahead of Reliance Power?s $2.9 billion initial public offering in 2008 and private-sector lender ICICI Bank?s $4.6 billion follow-on sale in the United States in 2007. The sale would help expansion plans at Essar, controlled by billionaire brothers Shashi and Ravi Ruia and whose interests include telecom and energy, steel and shipping. The group?s energy and power operations are valued at about $12 billion, one of the sources said.
?Essar Group is always looking at a range of different funding options but has not yet made any specific decision with regards to its future financing. The group works with a range of financial advisors to assist the group,? the company said in a statement.
The group is scaling up its power generation capacity in India to 6,000 MW. It is implementing close to 4,650 MW of power projects and has a 1,200-MW power unit coming up in Gujarat that is dependent on imported coal. The company is setting up a Rs 4,800-crore power project at Salaya near Jamnagar in Gujarat and the imported coal-based project is slated for completion by 2011.
Essar Oil, meanwhile, is in talks with Royal Dutch Shell to buy three European refineries. It is hoping to achieve financial closure for the expansion of Vadinar unit by the second quarter of 2010. The Phase-II expansion will incur an investment of $4.5 billion (around Rs 21,150 crore).
Essar is also raising the Vadinar refinery capacity to 16 million tonne from 10.5 million tonne by December 2010 and further to 34 million tonne in Phase-II expansion.