Essar Energy starts book building for LSE public offer to raise $2.5 bn

MUMBAI: Essar Energy on Thursday started the book building process for its maiden initial public offering on the London Stock Exchange. It plans to raise $2.5 billion or about Rs 11,135 crore as per current exchange rates.

This is likely to be one of the biggest public offers in London in the last two to three years and is expected to be priced at around 450 pence to 550 pence a share, according to people familiar with the development.

Through this offer, the Ruias will sell 20-25% of their stake in Essar Energy, that owns oil and power projects, to part finance proposed energy projects in the country and overseas. JP Morgan Cazenove and Deutsche Bank are the joint global coordinators for the offer which closes on April 29.

At current valuations, Essar Energy is expected to join FTSE 100 shortly after its listing and will start trading on LSE from April 30.

This offer will also be the second-largest public offer made by an Indian company anywhere in the world, after Reliance Power’s $2.9-billion offering in 2008. In 2007, Vedanta Resources raised $1.7 billion, while ICICI Bank collected $2.4 billion in the US.

“After a long gap of almost 15 years, the Essar Group has floated a public offer,” said an analyst with a global equity firm.

“This would be an opportunity for investors to participate in India’s economic growth story through a London-listed company.” The Essar Group has several plans including expanding power capacity, buying coal mines and developing oil and gas blocks to fuel forthcoming power plants.