Sovereign government funds of Singapore, Dubai and Abu Dhabi are in race to buy 5% stake in Reliance Power in a private placement ahead of its proposed IPO. The US private equity firm Blackstone is also in talks with the company and the stake is being valued at around $1 billion.
The Anil Ambani-promoted company is planning to raise up to $2.8 billion by tapping the capital markets by the year-end, making it the biggest IPO in Indian history. The company will dilute a little over 10% stake to the public and this pre-placement exercise is being done to put a valuation benchmark for the IPO, which is awaiting Sebi’s clearance.
According to i-banking sources, the expression of interest from various players gives Reliance Power a valuation of over $20 billion. The company may dilute any thing between 2.5% and 5% stake to raise around $500 million to $1 billion. The stakes will be diluted to three categories of investors — the sovereign, PE and financial institutions.
Besides, a host of hedge funds and other FIs have shown interest to pick up a stake in the company. These stakes will have a lock-in period for one year.
Blackstone India’s CMD Akhil Gupta had earlier said the PE major will be investing up to $1 billion in the next two years. Blackstone has already closed 5 transactions in India worth $855 million this year.
Reliance Power is believed to have shortlisted most of the private placement investors, while some of them are still believed to be doing the due diligence to submit their final bids. When contacted, Reliance Energy officials declined to comment anything on the issue.
UBS Securities is the global co-ordinators for this pre-placement issue, while Enam Financial is the Indian co-ordinators.
Source: Economic Times