The Anil Ambani-promoted Reliance Energy Limited announced on Sunday that its wholly-owned subsidiary Reliance Power will go public soon. The company will file a draft red herring prospectus with the Securities and Exchange Board of India shortly.
Reliance Power is expected to mop up $3.5 billion (Rs 14,000 crore) from the market, which will be the biggest public float in recent times after public issues by DLF and ICICI.
The company plans to add 25,000 MW capacity through new projects and expansion of capacity over the next couple of years. Much of the funds raised will be used for this purpose.
Going by the market value of Rs 4 crore per MW of energy, the company is valued at Rs 100,000 crore, according to investment bankers.
On the basis of this valuation, Reliance Energy will offload nearly 8 per cent stake through the proposed IPO.
The company is in talks with several investment banks, among them Kotak Mahindra Capital, JM Financial, J P Morgan, HSBC and Enam. The company will appoint a separate banker to sell the issue overseas.
A major investment will go into the 4,000 MW Sasan coal-based power project which the company bagged recently. The plant, which is expected to be completed in five years, will supply power to Madhya Pradesh, Uttar Pradesh, Delhi, Rajasthan, Haryana, Punjab and Uttarakhand.
REL had floated a special purpose vehicle, Sasan Power, to execute the project and this was merged with Reliance Power, a five-year-old company which executed about 268 MW.
Explaining the higher investment in Sasan, a company executive said, "We are investing Rs 25,000 crore (Rs 250 billion) in a gas-based 7,000 MW plant in Dadri, but since coal-based plants are costlier to set up, we are planning to invest Rs 20,000 crore (Rs 200 billion) for the 4,000 MW plant in Sasan."
Besides Dadri and Sasan, Reliance Power is also executing the 1,200 MW Rosa thermal power project in Uttar Pradesh. Work is underway on the first phase (2,800 MW) of the Shahapur project and another 1,200 MW will also be added at the Dahanu plant.
The Reliance Anil Dhirubhai Ambani Group has a market capitalisation of over Rs 200,000 crore (Rs 2,000 billion) on the stock exchanges, a net worth in excess of Rs 40,000 crore (Rs 400 billion), cash flow of Rs 9,000 crore (Rs 90 billion), and net profit of Rs 5,000 crore (Rs 50 billion) with zero net debt.
