SBI, ICICI buy 3% in Jaiprakash Power Ventures

State Bank of India (SBI) and ICICI Bank have together acquired 3% in Jaiprakash Power Ventures (JPVL), a wholly-owned subsidiary of Jaiprakash Associates (JAL), for Rs 400 crore in first of two private placements before its initial public offer (IPO).

This would be followed by another pre-IPO placement before the firm hits the market with a public offer, together raising Rs 3,500 crore.The company will dilute another 17% through the private placement and IPO, according to a person close to the development.

Of this, the pre-IPO deal is expected to be for about 3-4% of the equity, while the rest would be through the public offer. SBI and ICICI are supposed to have paid a little over Rs 230 per share. JPVL now has a paid-up capital base of Rs 541 crore, which includes 3% stake of the two banks.

JPVL is looking at a valuation of $5.5 billion, post-IPO. Following the IPO, the shareholding of Jaypee group in JPVL would come down to 80%.

JAL executive chairman Manoj Gaur didn’t comment on JPVL’s fund-raising plans. “We have completed hydropower projects in challenging situations from Jammu & Kashmir to Bhutan. Jaypee group has contributed in setting up 7,880 MW hydropower projects in all,” said Mr Gaur.

The Delhi-based Jaypee group, which has interests in cement, construction, infrastructure, real estate and power, has positioned JPVL as its primary vehicle for power projects, including thermal, hydro and transmission. The group has another subsidiary, JP Hydropower, a listed firm which operates the 300 MW Baspa-II project and is executing a power transmission project.

JPVL currently operates the 400 MW Vishnuprayag project and is expected to have a power generation capacity of 5,500 MW by 2015. It is executing the 1,000 MW Karcham Wangtoo hydropower project, a 2,525 MW hydro project in Arunachal Pradesh (2,025 MW at Lower Siang and 500 MW at Hirong) and a 1,000 MW thermal power project in Sidhi, Madhya Pradesh. It was recently awarded 750 MW hydropower projects in Meghalaya.

In the 18 months since its 400 MW Vishnuprayag project got partially commissioned in June 2006, JPVL has paid 19% dividend in the past 18 months. It reported a revenue for the period ending March ’07 at Rs 216 crore and profit after tax (PAT) of Rs 72 crore. The company reported a revenue of Rs 233 crore and PAT of 123 crore for the first half of the current year.