GMR Energy IPO on the anvil?

By Abhijit Neogy, CNBC-TV18

It could well be the next big ticket energy IPO. CNBC-TV18 learns from sources that GMR Energy, the wholly owned energy arm of infrastructure major GMR Group, is looking at offloading 10% stake through an IPO. The company is looking at raising around USD 500 million from the market.

GMR Energy, the wholly owned energy arm of infrastructure major GMR Group is planning to shed 10% stake through an IPO that may hit the markets after they stablise. Sources have told CNBC-TV18 that part of the proceeds may be used to fund the group's possible foray into ultra mega power projects.

“It’s early days yet. There is an internal financial rejig on the table. There are a whole host of strategic initiatives which we are drawing up but its still premature,” said GM Rao, Chairman, GMR Group.

Sources say the energy arm is looking to mop up atleast USD 500 million from the market, which values GMR Energy at USD 5 billion or Rs 20,000 crore. But for the moment though the group has tied up with private equity funds to part finance its energy projects in India which are on stream.

GMR Energy has a basket of about 6,000 mw of power projects in India- both thermal and hydel, out of which 1,000 mw is brownfield expansion at its Orissa thermal power plant

The company hopes to take its India energy basket to 15,000 mw by 2015.

GMR Energy is also planning to bid for generation, transmission and distribution of power in Turkey, which is about to be privatized. GMR Energy has raised adequate external commercial borrowings in December 2007. This has already been partly put to use by buying energy assets like coal-mines in South Africa. The possible IPOs as well as unutilised ECB proceeds will act as a warchest to acquire other energy and infrastructure assets abroad for the group.

The GMR Group has soaring ambitions in the fields of energy and infrastructure. In infrastructure specifically, there are long gestation periods that the company has to contend with. But the big question is can GMR’s execution track record now match up to its soaring ambitions?

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