Adani Power IPO receives huge investor response

IPO bid 21.5 times

The Adani Power initial public offering (IPO) got overwhelming response. The IPO was subscribed 21.51 times by 17:00 IST on the last day of IPO today, 31 July 2009. The IPO received bids for 535.16 crore shares as compared to 24.87 crore shares on offer. Of the total issue size of 30.16 crore shares, 5.28 crore shares were allotted to anchor investors, a day before the opening of the issue.

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.

As per Securities and Exchange Board of India (Sebi) norms, there is a 30-day lock-in for anchor investors.

Adani Power had fixed price band of Rs 90 to Rs 100 per equity share for its initial public offering (IPO). The Adani Power issue is the second biggest public offer after that of Reliance Power in 2008.

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.