Adani Power IPO subscribes around 4 times on day 1

Initial public offering of Ahmedabad based Adani Power (APL), promoted by Adani Enterprises, has received overwhelming response on day 1. The issue managed to achieve full subscription with in hours of its opening. It has been subscribed close to around 4 times (3.96 times) on close.

A total of 985,943,010 bids were received out of which 4,285,905 bids were received at cut-off price.

issue managed to achieve full subscription with in hours of its opening.As at 1:45 p.m, the issue was subscribed 3.87 times. A total of 962,302,445 bids were received out of which 1,306,305 bids were received at cut-off price

The company has proposed a public issue of approximately 301.65 million equity shares of Rs 10 each for cash at a price to be decided through 100% book building process. The issue closes on July 31, 2009.

The price band of the issue has been fixed at Rs 90 to Rs 100 a share. It hopes to raise around Rs 30.16 billion at cap price. The net issue will constitute 13.47% of the post issue paid up capital of the company.

The issue has been graded by ICRA as IPO Grade 3, indicating average fundamentals.

The equity shares of the company are proposed to be listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE).

DSP Merrill Lynch, Enam Securities (P), IDFC-SSKI, Karvy Computershare (P), JM Financial Consultants (P), Morgan Stanley INDIA Company, ICICI Securities, SBI Capital Markets are helping the company in the fund raising process.

APL is the first IPO that will follow the anchor investor norms, made mandatory by SEBI. The company has completed allocation of shares to anchor investors. It allocated 52.50 million shares to the domestic and foreign institutional investors for close to Rs 5.02 billion.

Foreign institutional buyers include T Rowe Price, AIC, Ecofin, TPG and Legg Mason. Among domestic institutions, Sundaram Mutual Fund pumped in Rs 810 million in Adani Power and was allotted shares for Rs 95 each while TPG and Legg Mason were allotted shares through Credit Swice and CLSA, respectively. T Rowe Price got the highest allocation of Rs 2.20 billion for equity share of Rs 95 each. AIC, Ecofin, TPG and Legg Mason invested Rs 242 million, Rs 244 million, Rs 800 crore and Rs 72.4 crore, respectively.

The company plans to deploy the issue proceeds to part finance the construction and development of Mundra Phase IV Power Project for 1,980 MW, funding equity contribution in its subsidiary Adani Power Maharashtra to part finance the construction along with development cost of power project for 1,980 MW at Tiroda, Maharashtra. Besides this, the issue proceeds would also be deployed for general corporate purposes.

Of the total equity float at least 60% of the net issue shall be allocated on a proportionate basis to QIB bidders. 5% of the QIB portion shall be available for allocation on a proportionate basis to Mutual Funds only and the remainder of the QIB portion shall be available for allocation on a proportionate basis to all QIB bidders, including mutual funds, subject to valid Bids being received at or above the Issue Price. If at least 60% of the Net Issue cannot be allocated to QIBs, then the entire application money will be refunded forthwith. Further, not less than 10% of the net issue shall be available for allocation on a proportionate basis to non-institutional bidders and not less than 30% of the Net Issue shall be available for allocation on a proportionate basis to retail individual bidders, subject to valid bids being received at or above the issue price.

Promoted by Adani Enterprises, Adani Power (APL) is a power project development company. APL currently has two projects namely Mundra Project (in four phases of developments) and Tiroda Project (in two phases via its subsidiary Adani Power Maharashtra) with a combined installed capacity of 6,600 mega watt (MW). It is also planning to develop two thermal power projects at Dahej and Kawai with a combined installed capacity of 3,300 mega watt (MW).

The company intends to sell the power generated from these projects under a combination of long-term power purchase agreements to industrial and state-owned consumers and on merchant basis.

With the commissioning of the power projects, the Adani Group aims to be vertically integrated in power sector value chain through presence in related activities such as coal mining, coal trading, shipping, power generation, power transmission and power trading.