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11-03-2010
Essar Group eyes $3bn London listing

Essar Group eyes $3bn London listing

By Joe Leahy in MumbaiPublished:

March 7 2010 19:10 | Last updated: March 7 2010 19:10

The Essar Group, one of India’s biggest conglomerates, is considering raising up to $3bn from listing its oil and power assets on the London Stock Exchange in what would be the country’s biggest overseas listing.The deal, which would value Essar’s energy businesses at $12bn, is one of the strongest options under consideration to finance an $8bn-$9bn expansion plan that would strengthen the group’s position in the top ranks of India’s oil refining and electric power generation sectors.It would also be a boost to the LSE, which recently lost out on the listing of  Rusal, the aluminium group controlled by Russian oligarch Oleg Deripaska. It opted to float on the Hong Kong exchange in January. Essar said on Sunday: “Essar Group is always looking at a range of different funding options but has not yet made any specific decision with regards to its future financing.”An Essar spokesman declined to elaborate. JPMorgan and Deutsche Bank have been appointed to advise the company on the fundraising, banking industry sources said. Both declined to comment.Under LSE rules, Essar would be required to list 20-25 per cent of the energy company, raising $2.4bn-$3bn, which would make the listing larger than previous Indian overseas initial public offerings in London and New York.At the upper limit, the deal would also be on a par with India’s largest domestic IPO, the $3bn listing of  Reliance Power in early 2008.The size of the listing shows the resurgence of corporate India as it moves ahead with aggressive capital expenditure plans, particularly in infrastructure projects in the power generation and oil sectors.Essar, with $15bn of revenues, is controlled by brothers Shashi and Ravi Ruia, who are joint fifth on Forbes’ Indian rich list.Essar has interests in telecoms – including a joint venture with  Vodafone of the UK, as well as steel, power, oil refining and outsourcing, in countries from the US to Kenya and parts of Asia.The company, India’s second-largest private sector power operator, has fully-funded plans to increase its power generation business from 1,200MW of capacity to 6,000MW by 2012.It would use the IPO funds for the next phase of this expansion, taking its power generation capacity to 11,000MW.In the oil business, the deal would help Essar finance the second phase of its refinery expansion to increase capacity from 300,000 barrels of oil per day to 750,000 bpd.Essar is expected to make a decision on its fundraising options in the next six weeks.

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