Essar Energy prices IPO at 420 pence a share

Essar Energy, part of Ruia family promoted Indian conglomerate, has priced its initial public offer (IPO) here at 420 pence a share, valuing the entire company at about $8.5 billion.

Investment banking sources said the public issue, pursuant to which Essar Energy would be listed on the London Stock Exchange, was fully subscribed within the previously proposed price range of 450-550 pence.

However, the company decided to price the IPO at a lower price of 420 pence "in order to ensure a successful listing and leave more on the table for investors," a source said.

Essar Energy is selling up to 25 per cent stake. JPMorgan Cazenove Ltd and Deutsche Bank AG are the joint global coordinators, the terms show.
     
This issue will also be Essar group's first offering to investors after a gap of 15 years.
     
Sources said the group found investor response encouraging, given the backdrop of financial and economic uncertainty that intensified in the week of book building, with the Greek debt crisis looming large on the financial markets.
     
There have been reports that Uralchem, a Russian fertiliser producer, had to postpone its London IPO, where it had sought to raise about $700 million. The company is said to have blamed current market conditions for the same.
     
The Essar IPO is said to have generated maximum proceeds in the London primary market since 2007.
     
Once listed, the Essar Energy stock will be the highest new entrant in the FTSE 100 with a market capitalisation of $8.5 billion approximately. Essar Energy is also the largest ever London listing of an Indian company.
     
Essar Energy plans to increase power generation from 1,220 MW to 11,470 MW and has interests around the world in 14 prospective oil, gas and coal seam gas exploration blocks.
     
Essar Energy's chairman will be Ravi Ruia, while the vice chairman will be Prashant Ruia. The CEO of the company will be Naresh Nayyar.
     
The Essar Group is a multinational conglomerate and a leading player in the sectors of steel, energy, power, communications, shipping ports & logistics, construction, and minerals. With operations in more than 20 countries across five continents, the Group employs 60,000 people and has revenues of $15 billion.
     
The Essar Group has plans to raise its refining capacity at the Gujarat-based Vadinar refinery to 375,000 bpd by 2011 from a current capacity of 300,000 bpd.
     
If market conditions permit, the refinery capacity will be increased to 750,000 bpd by 2013, making it India's largest single location refinery.
      
Additionally, the Group's power business, which is scaling up from 1,220 MW to 6,100 MW in Phase I currently and 11,470 MW in Phase II, will need capital infusion.