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Chennai-based OPG Power is planning to raise at least INR1,000 crore (INR10 billion) through a listing in India. The company has thermal power plants in Tamil Nadu and Gujarat and is already listed on the London Stock Exchange’s Alternative Investment Market (AIM).
“They are looking to raise at least INR1,000 crore (USD150 million). However, that figure could go up to USD200 million,” a Mint report quoted a source as saying.
Deutsche Bank and ICICI Securities have been reportedly hired to manage OPG Power IPO, although the company denied roping any investment banker for the issue. The Chennai-based company currently has a 450 MW thermal power plant operational in Tamil Nadu with another 300 MW plant on stream in Gujarat. OPG Power plans to expand its capacity from the current 750 MW to beyond 1,200 MW over the next five years. The new capacity is expected to be added through a blend of thermal and solar power projects. While the company prefers to undertake greenfield projects, acquisitions are not entirely ruled out.
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OPG Power IPO can change perception around power business
According to company documents, OPG Power generated a top line of INR10.83 billion in the six months ended 30 September 2016, marking a 94% surge from the same period of previous year. Electricity generation is not seen as a very lucrative business but OPG Power IPO could change that perception among investors, thanks to its profitable operations. During the first six months of FY 2017, the company earned an EBITDA (earnings before interest, taxation, depreciation and amortization) of INR3.87 billion, translating into a margin of 35.7%.
It is interesting to note that renewable energy, specifically solar power, features prominently in OPG’s plans. The company has four projects totaling 62 MW becoming operational in the current calendar year. However, OPG isn’t the only company focusing on renewable energy. The sector has attracted immense interest from investors, especially after the government’s plan to install 100 GW of solar power by 2022. Hyderabad-based Mytrah Energy, Gurgaon-based ReNew Power Ventures and Delhi-based Hindustan Power Projects (HPPL) are among the companies looking to bring their IPOs in India.