Adani Power, a subsidiary of Adani Enterprises, has received the Securities and Exchange Board of India’s, or Sebi, approval for an initial public offering, or IPO. The company is likely to offer about 26.7 crore shares to the public. It plans to raise about Rs 5,800 crore through the IPO.
The parent currently holds about 86.45% stake in the company. It would dilute about 14% stake in the company through this IPO. Its stake will go down to about 74% in Adani Power post issue.
On the valuation front, this Rs 5,800 crore, which they are planning to raise, values Adani Power at about Rs 41,000 crore, or about Rs 200 per share.
Earlier, Adani Power was planning to tap the market but a conversion of preference shares took place. 3i converted Adani Power’s preference share at Rs 46.8 per share. These were ex- bonus. After that, there was a bonus issue in the ratio of four shares for every five shares held. Ex-bonus, the value comes to about Rs 26 per share.
Surprisingly, the company is planning to raise funds at a substantial premium to its valuation. Adani Power is planning to implement mega thermal power projects across India and plans to get into power transmission in a big way. However, there is no clarity on the valuation front. It seems like a pretty steeply priced IPO as of now.
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