Oct. 12 (Bloomberg) -- Indiabulls Power Ltd., a utility partly owned by billionaire Lakshmi Mittal, got more than 66.4 billion rupees ($1.4 billion) of bids, or 6 times the shares on offer in its initial public offering.

The unit of Indiabulls Real Estate Ltd. received bids for 1.66 billion shares on the first day of the sale today compared with 278.6 million shares offered by Indiabulls Power, according to the Web site of the National Stock Exchange. The shares were being offered at 40 rupees to 45 rupees apiece.

Investors are betting energy demand will climb as the government invests in electricity generation in a nation where the peak power deficit may rise to 13 percent in the year ending March 2010. Power generators Adani Power Ltd. and state-owned NHPC Ltd. raised a combined $1.81 billion, accounting for 68 percent of the initial share sale proceeds this year.

Investors could have been attracted to the initial share sale because of “the strength of the Indiabulls management and the fact that Lakshmi Mittal has invested in the company,” said Bhargav Buddhadev, an analyst at Noble Research who is advising investors to avoid the initial share sale as the company won’t make money till February 2012 when its first plant comes up.

Indiabulls Power, 10.7 percent owned by Mittal’s LNM India Internet Ventures Ltd., plans to raise as much as 17.6 billion rupees to fund its electricity generation plants. The utility is constructing five thermal power plants and four hydroelectric units in India that will have a combined capacity of 6,782 megawatts.

Power Plant

The offer excludes a greenshoe option of 50.9 million shares and stakes sold to investors before the bids opened. Eight investors, including Copthall Mauritius Investment Ltd. and BNP Paribas Arbitrage, bought a combined 61.2 million shares at 45 rupees apiece, the company said in a statement to the National Stock Exchange on Oct. 9.

Adani Power, which got bids for 22 times the shares it offered, gained 0.7 percent to 101.95 rupees in Mumbai, compared with the sale price of 100 rupees a share. NHPC, which was oversubscribed 23.7 times, fell 0.2 percent to 33 rupees, below the issue price of 36 rupees a share.

Indiabulls Power plans to use 14.4 billion rupees from the IPO to part-finance a 1,320 megawatt thermal power plant in Amravati and a 1,335 megawatt thermal plant at Nashik, both in western India, according to the share-sale document dated Oct. 1.

India aims to double its installed power capacity in the next seven years from 152,148 megawatts as of Aug. 31 to end blackouts in Asia’s third-biggest economy.

To contact the reporter on this story: Gaurav Singh in New Delhi at gsingh31@bloomberg.net.

Last Updated: October 12, 2009 09:35 EDT