The Ruia-controlled Essar Power (EPL) is offloading 10% stake to private equity (PE) investors to raise up to $700 million. The equity of the company is valued at $7 billion, sources said.
Essar Power currently operates power plants with a capacity of 1,200 MW and has drawn up an investment plan of over $4 billion to set up three more projects with cumulative capacity of 3,600 MW. The projects are coming up in Gujarat, Madhya Pradesh and Jharkhand and are expected to be funded on the basis of debt-equity of 3:1. The company has drawn up plans to set up projects of about 6,000 MW capacity.
The Indian power sector is attracting a lot interest from international investors. Projects with fuel linkages fetch attractive valuations. As Essar Power has developed capabilities in setting up mega power projects, the investors are eyeing the company as a potential investment target, said industry analysts.
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