3i-backed Indian power company in $623m IPO

Adani Power, in which 3i just upped its stake last month to 7.4%, is reportedly the largest Indian IPO in 18 months and was 4 times oversubscribed within a few minutes of opening.

Adani Power, a 3i portfolio company, launched a record-setting IPO today after first receiving anchor commitments from institutional investors under recently approved Indian regulations.

The company had planned to raise approximately INR30 billion ($623 million; €436 million), offering each share at between INR90 to INR100 through 31 July. The IPO received nearly four times as many bids within an hour of the offering, with most bids coming in at INR95, according to Indian daily The Economic Times.

Power plants: high investor demand

It is the largest Indian IPO in the past 18 months, according to Reuters.

Approximately INR5 billion was raised from anchor investors such as investment manager T Rowe Price, hedge fund TPG-Axon Capital and investment firm Ecofin, under a policy approved by the Securities and Exchange Board of India last month. Companies are able to pre-allocate up to 30 percent of a their IPO to institutional investors, who have to comply with a 30 day lock-in period. Adani Power is the country's first company to obtain anchor investments under the new policy.

3i is the company's largest stakeholder behind its parent Adani Group, which is led by Indian billionaire Gautam Adani of Ahmedabad. In 2007, a $227 million investment into Adani Power marked the maiden deal from the 3i India Infrastructure Fund, which closed on $1.2 billion in April 2008. Last month, 3i injected an additional INR744 million into Adani Power, which post-IPO gives it a 7.37 percent stake. 

Adani Power is developing a portfolio of power plants across India and currently has six power projects in different phases of development. It said the capital raised in the IPO will be used to partially finance the construction and development of its power projects at Mundra in Gujarat and Tiroda in Maharashtra.

The company should be listed on the Bombay Stock Exchange and the National Stock Exchange by the third week of August, according to a spokesman. 

Adani Power had filed an initial draft prospectus last May. However, the plan to list at the time was postponed due to weak market conditions.

3i declined to comment.