Adani Power IPO by July-end

Adani Power, part of the diversified Adani Group, will launch its initial public offer by the end of this month. It got the capital market regulator's clearance on Tuesday.

In its draft red herring prospectus, the company had sought to raise Rs 2,200 crore, but sources said the issue size could be raised to Rs 3,000 crore, making it the first big issue after the Reliance Power IPO in February last year.

The company had earlier postponed its IPO in September 2008 due to bad market conditions.While the company is offering 330 million equity shares through the IPO, sources said employees would be able to subscribe at Rs 90 a share.

The Adani Power IPO will be a test of market sentiments, as it comes after a near-drought of more than a year in the primary market. The recent IPO of Mahindra Holiday Resorts was subscribed 10 times, but analysts said it was a relatively small issue compared to this one.

The markets cheered the clearance of the IPO, with Adani Enterprises, which holds 83 per of Adani Power, hitting the 10 per cent upper circuit on the Bombay Stock Exchange on Tuesday. Ameet Desai, director of Adani Power, said the company would file its prospectus today itself and the roadshows would begin next week.

The IPO will partly finance Adani's 6,600 Mw power plants at Mundra in Gujarat and Tiroda in Maharashtra. At present, the promoters hold 87 per cent equity in the company. After the IPO, the promoters' stake will come down to 73.5 per cent.

The company has tied up Rs 22,676-crore debt for the power projects and the promoters have put in Rs 3,500 crore.

The IPO floodgate could open now, with NHPC expected to come to the market with a similar-sized issue. According to Prime Database, the other companies that have already got Sebi approval for IPO or follow-on public offers include Oil India (Rs 1,400 crore), Godrej Properties (Rs 750 crore) and Pipavav Shipyard (Rs 700 crore). Another 15 are looking to raise Rs 2,200 crore, but are awaiting Sebi's approval.