Adani Power IPO Review and Analysis

Adani Power IPO Review |  Adani Power IPO Analysis

Today, The Adani Group opened its IPO (Initial Public Offer) which has received overwhelming response from investors.

Recently Adani Power has finished distribution of shares for investors. It allocated 5.25 crore shares to the domestic and foreign institutional investors (T Rowe Price, AIC, Ecofin, TPG and Legg Mason) for Close to Rs. 502.14 crore.

Among the domestics an institution Sundaram Mutual Fund pumped in Rs 81 crore in Adani Power and was allotted shares for Rs 95 each. As TPG and Legg Mason were selected shares through Credit Swice and CLSA, respectively.

T Rowe Price got the highest allocation of Rs 220.10 crore for per equity share of Rs 95. AIC, Ecofin, TPG and Legg Mason invested Rs 24.20 crore, Rs 24.40, Rs 80 crore and Rs 72.4 crore, respectively.

The Issued has received subscription of 3.95 times with bids for 983854040 equity shares against the offer of 248794681 equity shares and also received subscription of 2.97 times in NSE with bids for 738820550 equity shares against the offer of 248794681 equity shares.

The deal comes at a valuation of Rs 95 per equity share for a total consideration of around Rs 502 crore. The IPO will have a price group of Rs 90 to Rs 100 and expects to raise upto Rs 3016 crore. Around 30 Crore shares or around 13% of the total share offering are expected to be sold through the Adani Power IPO. The IPO for Adani Power selling process has been started today and it will run till 31st July, 2009.

Adani Power IPO Analysis

Adani Power has got SEBI permission for its IPO and Today it releases its IPO which will run till 31st July 2009.

Background of Adani Power

Adani Power is a part of Adani Enterprise Limited, which has revenues of over Rs.196, 097.10 million in the last financial year. Adani Power Currently holds over 85 per cent stake in Adani Power and after the public issue the promoter stake will be reduced to 73 per cent.

Adani Power Limited will be in the business of developing, operating and maintaining power projects in India, in a way; it will be in the same league as NTPC and Reliance Power.

Current Projects of Adani Power

• Mundra Phase 1 & 2 with a capacity of 1,320 MW. The first phase of 330 MW in each phases are expected to get commissioned by June 2009 and the full project is expected to get commissioned by Feb 2010.
• Mundra Phase 3 will have a capacity of 1,320 MW, which should be commissioned towards the end of the second quarter of 2011
• Mundra Phase 4 project with a capacity of 1,980 MW, to be commissioned in part in 2011 and 2012
• There is another project of Mundra Power by the name Tiroda Power Project which has a capacity of 1,980 MW. Out of these 1900 MW of Tiroda Power Project, 660 MW will be commissioned by July 2011 and the remaining by April 2012

Usage of funds raised in the Mundra Power IPO

The funds will be used for the development of Mundra project as well as the Tiroda power plant in Maharashtra, resulting in generation of 6500 MW of power. The total capex will be around Rs 28,369 crore.

Access to raw materials Like Cals Refineries, Adani Power will have easy access to coal, the basic raw material for electricity generation since its parent company, Adani enterprises have a strong interest in coal and is a major producer and distributor. Up to 45% of coal needs Adani Power would be met from domestic relations of Adani enterprises and the remaining 55% would be imported from Malayasia.