Nov. 11 (Bloomberg) -- KSK Energy Ventures Ltd., the Indian utility whose stakeholders include funds tied to Lehman Brothers Holdings Inc., plans to raise as much as $125 million selling shares to institutional investors.

KSK will sell as many as 30 million shares between 194.5 rupees and 196 rupees apiece, a sale document showed. The Hyderabad-based company also reached an agreement with the Lehman affiliate that holds 23.2 percent of its equity not to sell a 13.2 percent stake for two years, it said in a statement to the National Stock Exchange yesterday.

The utility joins state-owned NHPC Ltd. and billionaire Gautam Adani’s power producer in tapping appetite for energy stocks as companies set up plants in a nation that may suffer a peak-hour power shortage of 13 percent this year. India’s benchmark equity index is headed for its best year since 2003 as an estimated 6.5 percent economic growth lures foreign investors.

KSK, which reported a 40 percent increase in profit for the year ended March 31, raised 8.3 billion rupees ($194 million) in an initial share sale in July last year. The company plans to use the money from the latest sale for new projects, repayment of loans and working capital, it said in the pre-sale document.

Shares of KSK rose 0.9 percent to 200.65 rupees as of 11:55 a.m. local time in Mumbai trading. They have advanced 4.3 percent this year, compared with the Sensitive Index’s 72 percent rally.

Non-Binding Agreement

LB India Holdings, the affiliate of Lehman, is its largest institutional investor with a 23.2 percent stake as of Oct. 30. The non-statutory agreement stipulated that LB India won’t sell, pledge or transfer the 13.2 percent stake until Oct. 29, 2011, according to the pre-sale document.

Still, there’s “no assurance” that LB India won’t sell its holdings, KSK said in the filing. A perception that such sales may occur may also “adversely impact the price,” KSK said in the sale document.

The LB India funds last month sold a 5.23 percent stake in KSK at 200 rupees each, filings to the Mumbai exchanges showed.

India Infoline Ltd. and Axis Bank Ltd. are managing the latest share sale.

To contact the reporter on this story: Pooja Thakur in Mumbai at pthakur@bloomberg.net

Last Updated: November 11, 2009 01:44 EST