Indiabulls Power IPO subscribed 5.8 times

Indiabulls Power Ltd, partly owned by billionaire Lakshmi Mittal, got more than Rs 6,480 crore ($1.4 billion) of bids, or 5.8 times the shares being sold in its initial public offering (IPO).

The unit of Indiabulls Real Estate Ltd received bids for 1.62 billion shares as of 4 pm compared with the 278.6 million shares being offered, according to the website of the National Stock Exchange. The shares are being offered at Rs 40-45 apiece.

Investors are betting that the energy demand will climb as the government invests in electricity generation in a nation where the peak power deficit may rise to 13 per cent in the year ending March 2010. Power generators Adani Power Ltd and state-owned NHPC Ltd have raised a combined $1.81 billion, accounting for 68 per cent of the total IPO proceeds this year.

 

Investors could have been attracted to the initial share sale because of the strength of the Indiabulls management and the fact that Lakshmi Mittal had invested in the company, said Bhargav Buddhadev, an analyst at Noble Research who is advising investors to avoid the initial share sale as the company won’t make money till February 2012 when its first plant comes up.

Indiabulls Power, 10.7 per cent owned by Mittal’s LNM India Internet Ventures Ltd, plans to raise as much as Rs 1,760 crore to fund its electricity generation plants. The utility is constructing five thermal power plants and four hydroelectric units with a combined capacity of 6,782 megawatts.

<B>Power Plant </B><BR>
The offer excludes a greenshoe option of 50.9 million shares and stakes sold to investors before the opening of the bids. Eight investors, including Copthall Mauritius Investment Ltd. and BNP Paribas Arbitrage, bought a combined 61.2 million shares at Rs 45 apiece, the company said in a statement to the National Stock Exchange on October 9.

Adani Power, which got bids for 22 times the shares it offered, gained 0.7 per cent to Rs 101.95 in Mumbai, compared with the sale price of Rs 100 a share. NHPC, which was oversubscribed 23.7 times, fell 0.2 per cent to Rs 33, below the issue price of Rs 36 a share.

Indiabulls Power plans to use the money from the IPO to part-finance a 1,320-megawatt thermal power plant in Amravati and a 1,335-megawatt thermal plant at Nashik, according to the share-sale document dated October 1. India aims to double its installed power capacity in the next seven years from 152,148 megawatts as of August 31.

BS Reporter adds: The qualified institutional buyer (QIB) portion was subscribed over 10 times. The high networth individual, or the non-institutional investor portion, was subscribed over two times, whereas the retail portion was subscribed over 0.37 times.

The minimum bid lot is 150 equity shares and in multiples of 150 shares thereafter. The issue will close on October 15.