Essar Group Said to Contemplate $750 Million Infrastructure IPO in London
Essar Group, the Indian company whose businesses range from shipping to power, is considering listing infrastructure assets in London to raise about $750 million, three people with knowledge of the matter said.
JPMorgan Chase & Co. (JPM) and Credit Suisse Group AG (CSGN) are working with Essar on the initial public offering, which may take place as early as next year, the people said, declining to be named because the process is private. The listing may include ports and other infrastructure assets, one person said.
The deal may mark the biggest overseas IPO by an Indian company since May 2010, when another Essar unit, Essar Energy Plc (ESSR), raised 1.27 billion pounds ($2 billion). The value of overseas stock sales by Indian companies fell to $274 million this year from $2.2 billion for all of 2010, as Europe’s debt crisis caused a global stock selloff.
“Every day we hear bad news from Europe, but I think things will start looking up after six months, and that may be a good time for a London listing,” said Alex Mathews, head of research at Geojit BNP Paribas Financial Services Ltd. “Essar should benefit from huge demand in the infrastructure space in India.”
India plans to double spending on roads, ports and power projects to $1 trillion for the five years through March 2017. The nation’s central bank last month eased overseas borrowing rules for infrastructure companies to attract investors.
Essar Group’s units include Mumbai-listed Essar Ports Ltd., which develops and operates port terminals, and Essar Projects, a construction company. Started as a construction firm in 1969, the company now employs 75,000 people in 25 countries, according to its website.
Essar Ports fell as much as 4 percent today, touching its lowest level in a year. The shares traded at 55 rupees as of 2:50 p.m. in Mumbai, down 66 percent so far this year.
Essar Energy, made up of several Essar Group entities that were brought together before the London listing, has tumbled 58 percent in 2011.
“The group is always looking at various options available to it for raising capital, given its significant growth trajectory,” Essar Group said in an e-mailed statement in response to questions from Bloomberg News. “As of now there is no specific transaction proposed.”
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