Bhushan Power eyes global listing to raise $700 m

MUMBAI: Bhushan Power & Steel is exploring options of an international listing, to raise up to $700 million to part finance its future projects that includes building a high value specialised steel making facility in Gujarat or Maharashtra.

The Rs 5,000-crore unlisted Delhi-based company, which is different from the listed Bhushan Steel owned by sibling Neeraj Singhal— has plans to build a 3,00,000-tonne cold rolling mill for Rs 800-1,000 crore and is considering the international float to fund this and other expansion projects, according to people familiar with the development. Early this year, Bhushan Power chairman Sanjay Singhal had indicated that his company was considering a public float.

The investment banking arms of US’ JP Morgan Chase and Swiss’ Credit Suisse are working with Bhushan Power for the proposed international offer that could include a listing on the London Stock Exchange (LSE), which has always been preferred by metal and resource companies as valuations are higher and smelting activities are valued separately. If the overseas fund-rasing goes through, Bhushan Power would be following Anil Aggarwal’s Vedanta Resources and the Ruias’ Essar Energy which had listed on the London Stock Exchange.

Bhushan Power chairman Sanjay Singhal denied the company was considering an international listing. “We don’t have any operations overseas and there is no need for such an exercise,” he told ET over phone from Delhi.

According to London Stock Exchange rules, a company should float at least 25% of its shares during an IPO. “The transaction will help Bhushan create global branding and help it in its pursuit of global M&A opportunities,” said a banker working with Bhushan Power. Bankers and the management are yet to fix a price at which the company’s shares will be sold.

While Vedanta’s LSE listing was in 2003, it had raised a record $1 billion through the listing . The mining group has decided to initiate the process to list its Zambian subsidiary, Konkola Copper Mine, on LSE next month. Similarly, Jubilant Energy, a privately-held oil exploration and production company under the Bhartia Group, has said it would raise $85 million by selling about 21.8% to institutional investors on the London Stock Exchange’s AIM market.

Bhushan Power operates a 1.5 million tonne steel plant in Jharsuguda, Orissa, and is planning to expand the capacity to 2.5 million tonne by March next year at an additional investment of `3,000 crore. Bhushan’s cold rolling mill is scheduled to be commissioned by 2012. Cold rolling steel products are used by the automotive and consumer goods sectors.
The steelmaker has been exploring various options in the past year to raise funds. In March, senior executives from ArcelorMittal had met with the Bhushan Power management to discuss a possible strategic investment. Christophe Cornier, a member on the ArcelorMittal board and CTO Pierre Gugliermina met officials at Bhushan Power because of its manufacturing presence in Orissa and its ownership of mining leases.