Adani Power IPO attracts strong investor response on day one

Allots 5.28 crore shares at Rs 95 per share to 6 anchor investors

Adani Power received spectacular response to its initial public offering which opened for subscription today, 28 July 2009. The IPO was subscribed 3.96 times on the day one. The IPO received bids for 98.59 crore shares compared to 24.87 crore shares on offer. The issue will close on 31 July 2009. Of the total issue size of 30.16 crore shares, 5.28 crore shares were allotted to anchor investors.

Adani Power has become the first Indian listing candidate to use new rules that allow companies to sign up anchor investors through a bookbuilding process, one day before the formal order taking starts. The company has allocated 5.28 crore shares at Rs 95 per equity share (at the mid-point of the price band) to six different anchor investors, some of which will take shares through several sub-funds in anchor portion of the Adani offering. The six buyers are: Ecofin, AIC Advantage Fund, CLSA, T Rowe Price International, Sundaram BNP Paribas Mutual Fund and Credit Suisse.

Of the 60% of the net issue allotted to qualified institutional buyers (QIBs), a maximum of 30% could be reserved under the anchor investor scheme. In this case, 30% of the QIB quota that the six anchor investors have bought forms 18% of the total issue size. As per Securities and Exchange Board of India (Sebi) norms, there is a 30-day lock-in for anchor investors.

Adani Power has fixed price band of Rs 90 to Rs 100 per equity share for its initial public offering (IPO). Adani Power is offering 30.16 crore equity shares of Rs 10 each for cash at a price to be decided through a 100% book-building process. The issue would constitute 13.84% of the post-issue paid-up capital of the company. The company has reserved 80 lakh shares for employees.

On 20 July 2009, Adani Power said it sold 36 million shares to a founder group firm and to private equity firm 3i. The shares were allotted on 25 June 2009 at Rs 81.42 a share to 3i Power Investments and at Rs 111.50 to Mauritius-based Capital Trade & Investments,

The proceeds of the IPO will be used to partly finance the construction and development of its coal-based power projects at Mundra in Gujarat and Tiroda in Maharashtra. Post listing, promoter Adani Enterprises will hold about 73.5% in the power firm.

Adani Power is implementing two thermal power plants in Mundra in Gujarat and Tiroda in Maharashtra. It has signed power purchase agreements with Haryana, Maharashtra and Gujarat governments for selling power from the 2,000 megawatt Mundra and 1,320 megawatt Tiroda projects. The company also proposes to set up a 1,320- megawatt plant in Rajasthan and another 1,980 megawatt project at Dahej in Gujarat.

Currently, Adani Power has no operational power plant except the modest 330-MW unit I of Mundra Power Project (MPP)'s phase I, synchronized in May 2009. All others are either under execution or on the drawing board. This Unit I of MPP is expected to go on stream this month and the revenue generation is expected thereafter