Bajaj Energy to Raise INR 5,450 Crore via IPO, Gets SEBI's Approval
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The thermal power generation company, Bajaj Energy Ltd has received the nod from the capital markets regulator, Securities and Exchange Board of India (SEBI) to go public. Involved in the business of generation, distribution and trading of power, the company plans to raise an estimated INR 5,450 crore through the initial public offering (IPO).
The INR 5,450 Crore IPO
According to draft papers, Bajaj Energy's initial public offering (IPO) comprises fresh issuance of shares aggregating up to INR 5,150 crore and an offer for sale of scrips up to INR 300 crore by Bajaj Power Ventures. As per media reports, the company filed its IPO papers with the markets regulator in April and obtained its ‘observations’ on August 30.
For any company planning to launch public issues, Sebi's observation is necessary. The company plans to utilize the proceeds from the IPO to purchase 6,99,36,900 equity shares of Lalitpur Power Generation Company from Bajaj Power Ventures and Bajaj Hindustan Sugar for INR 4,972 crore and the remaining amount will be utilized for general expenses.
Shift in Ownership
Currently, Bajaj Power owns 100 per cent stake in Bajaj Energy, which has a gross installed power-generation capacity of 2,430 MW that comprises 450 MW from five operational plants of 90 MW each, owned and managed by Bajaj Energy. 1,980 MW is generated from the power plant owned and managed by a special purpose vehicle of Lalitpur Power.
Bajaj Energy intends to acquire Lalitpur Power's 1,980 MW from the proceeds of the share sale. Edelweiss Financial Services, IIFL Holdings and SBI Caps are the lead managers to the issue, while IDBI Capital Markets is the co-book running lead managers to the issue. It has been a decade since a thermal power company last went public.
The Thermal POWER
Indiabulls Power and Adani Power had launched IPOs in the second half of 2009 whereas New Delhi-based GMR Group attempted an IPO of its energy business GMR Energy in 2014 but scrapped plans later. An IPO and subsequent listing will see Bajaj Energy join comparable peers Adani Power Ltd, Tata Power Ltd, NTPC Ltd, JSW Energy Ltd and Torrent Power Ltd on the stock exchanges.
Incorporated in 2008, Bajaj Energy is led by Kushagra Bajaj, the son of Shishir Bajaj, the elder brother of Rahul Bajaj who led Bajaj Auto before his son Rajiv took over. The company reported a consolidated net profit of INR 35.9 crore for the nine months ended December 2018 on revenue (from operations) of INR 694 crore. However, the net profit growth has declined 26 per cent on a compounded annual basis in three years.