Power sector to raise Rs 16k cr from capital market

Country's power sector will raise over Rs 16,000 crore (Rs 160 billion) from capital market in the next few months as firms such as Reliance Power, REC and NHPC line up to float their initial public offerings.

As many as seven companies, the latest being Anil Dhirubhai Ambani's Reliance Power, have filed draft papers for their initial public offers with market regulator Sebi.

In fact, six of the seven companies filed their documents in the last three months.

So far, 2007 has witnessed about Rs 3,900 crore (Rs 39 billion) inflow from capital market and the upcoming IPOs would take the total proceeds from public issues this year close to Rs 20,000 crore (Rs 200 bilion) in the power sector.

Power sector firms that entered the capital market this year include Power Finnace Corp and PowerGrid Corp. Besides, there have been smaller issues from Suryachakra Power and Indowind Energy, which mopped up nearly Rs 135 crore (Rs 1.35 billion) collectively from their IPOs.

The fund flow through capital market into the power sector was nearly Rs 1,300 crore (Rs 13 billion) in 2006 through IPOs of firms, including Lanco Infratech and GMR Infra.

According to investment bank Atherstone, the power sector has been on a high with the stock prices of existing players appreciating sharply. A power sector index compiled by the firm comprising 14 companies appreciated by 42 per cent in the last one month.

"Given the splendid performance of most sectors in 2007, where else do investors make money from hereon? We like power sector due to the ever increasing demand -supply mismatch which would continue upto 2017," Artherstone said in its latest report.