Private players spin off power units to garner funding

Jindal Power has announced its intention to float an initial public offering (IPO) this April. A move that should have been expected, for it fits in with the emerging trend among private players who have been redoubling their efforts on scaling up their power sector businesses.

With an eye on attracting private equity funding or raising capital from the market towards this, several of them have been hiving off their power operation or floating separate subsidiaries for it. While Jindal Power's IPO targets around Rs 7,000 crore, the subsidiary of the Navin Jindal Group's flagship company Jindal Steel & Power (JSPL) was initially spun off to set up the country's first mega power project in the private sector at Raigarh, Chhattisgarh. While the Jindals have already made a substantial investment in the power business, including around Rs 4,338 crore for a 1,000-MW plant and Rs 13,410 crore for a 2,400-MW thermal plant in Tanmar, it has also signed an MoU with the State Government of Jharkhand to set up a 2,640-MW thermal plant. In the hydro sector, too, JPL has signed a few agreements for 6,100 MW projects in Arunachal Pradesh. Lanco Infra's plans But Jindal is not alone in this mission. Lanco Infratech, for which 55% of the revenues come from the power segment, has also made public its intention to hive off its power business into a separate company and hit the capital market in 2012. Currently, Lanco has a power generation capacity of 2,100 MW under eight special purpose vehicles and plans to raise its capacity to 4,000 MW by 2011. By 2015 it targets up to 15,000 MW. Moser BaerMoser Baer too has floated a separate firm for projects