Essar Energy to raise US$2.5bn in London listing

Essar Energy aims to raise US$2.5bn in an initial public offering (IPO) of shares in London. Essar Energy announced its intention to proceed with an initial public offering (IPO) of its shares to institutional investors in the United Kingdom and elsewhere. Essar Energy intends to apply for its Shares to be admitted to the Official List of the FSA and to trading on the London Stock Exchange's (LSE) main market for listed securities (Admission). On completion of the Offer, it is expected that Essar Energy will be considered for inclusion in the FTSE 100 Index as well.

Ravi Ruia, Chairman of Essar Energy, said, "At the time of the Offer, we will have already invested over US$2bn of capital in Essar Energy. A London listing gives us an excellent platform to showcase the potential of the Indian market to the world, and to give investors a unique, London-listed, liquid vehicle to access and share in the Indian growth story."

Essar Energy is the Ruia family’s holding company for power and oil assets, including Essar Oil that is listed in India. The US$14bn group plans to sell up to 25% of Essar Energy in London. Essar Energy is likely to list its shares on the London Stock Exchange in a month. The planned transaction pushed the Essar Oil stock higher in Mumbai. Essar Energy’s offer is the largest IPO in London after Scotland’s biggest insurer Standard Life raised US$4.5bn in 2006 and the biggest-ever overseas initial sale by an Indian company. In 2007, Sterlite Industries raised US$1.7bn and ICICI Bank collected US$2.4bn in the US in secondary offerings.

Essar Energy owns stakes in a 300,000 barrels-per-day refinery at Vadinar in Gujarat and a 50% stake in a Kenyan refinery. It also runs four power plans that can produce 1220 MW. Essar Energy plans to raise power generation to 11,470 MW over the next few years and refining capacity to 750,000 barrels a day.