Indian IPO

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Tuesday, April 04, 2006

Hutch Essar plans jumbo Rs 5000cr IPO

Hutchison Essar is mulling one of the biggest initial public offer, IPO, ever in India. The offer, pegged at Rs 5,000 crore (Rs 50 billion), is one of the biggest ever and is in the league of TCS and NTPC, which had raised USD 1 billion plus, a couple of years back and now Reliance Petroleum which is raising a little more than that, reports The Economic Times.

Sources suggest that Hutchison Essar would float close to 10% of the equity with fresh issue of shares. This would peg its valuation at close to USD 12 billion, making its market capitalisation about the same level as SBI, the largest bank in India.

According to sources, the mandate for managing the public offer has been given to Kotak Mahindra Capital.

Even as there were market rumours that the proposed IPO would be delayed in light of recent developments including the Orascom issue, sources inform that the draft prospectus could be filed soon with Sebi.

Interestingly, Kotak Group had recently sold off its equity stake in Hutchison Essar. Asim Ghosh, managing director of Hutchison Essar, said, “It is premature to comment.

We have neither finalised the size of the issue nor the percentage of float nor the exact time when the IPO would come out.” Sources indicate that the internal valuations of the company are being pegged in the region of USD 12 billion, which also stacks with the IPO size being talked about in the streets.

If that is the eventual valuation, it could place Hutch at a higher valuation compared to Reliance Communications Ventures, RCoVL, the holding arm of Reliance Infocomm.

RCoVL is currently valued at Rs 40,000 crore (Rs 400 billion) or about USD 9 billion in terms of its market cap. However, Hutchison Essar’s valuation would be much lower than that of Bharti Tele Ventures whose market capitalisation is around USD 18 billion currently. Hutchison Essar’s IPO would be among some other mega public offers which are slated to hit the bourses this year.

Among the big issues of the past, IT major TCS scooped more than Rs 5,400 crore (Rs 54 billion) while power company NTPC raised a similar amount two years back.


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