A Green Power Utility to IPO in India

Orient Green Power Ltd (OGPL), is planning to raise  Rs 900 crore to fund its expansion plans of raising capacity to 1000 MW by 2013 from the less than 200 MW now.Shriram EPC, Bessemer andOlympus Capital are the promoters of this company started in 2007 . From its website

OGPL is a leading renewable energy producer in India. Established in 2007, OGPL is a diversified renewable energy company focused on the development, ownership, and operation of wind, biomass and small hydel projects.OGPL currently has an aggregate installed capacity of 175MW, which comprises of 134.5 MW of wind and 40.5 MW related to biomass projects. OGPL has more than 500 MW under construction/implementation pipeline.

While more details on valuation and the quality of their existing projects would come out later , seems a very good time for the promoters to get additional funding given the hot theme of “power” and “green” which their company combines.

China’s Longyuan Power Group Corp., the country’s biggest wind-power producer and with a similar green power utility profile managed a very successful IPO raising more than $2.6 billion in HongKong in December 2009 . Stock price is up 15% from its IPO price.2 other big Chinese electricity utilities (Huaneng  Group and Datang group) are thinking of raising money from the market by spinning off their  renewalbes unit .Italy’s huge utility Enel is thinking of doing it as well.

With the globe excited about green power utilities , why should India be behind . However the main difference  between these IPOs and Orient Power is one of scale and parentage. All these foreign companies have strong expertise in the electricity industry with a large portfiolio of renewable projects diversified over a number of sites.Orient Green Power seems quite small less than 200 MW of capacity and no deep expertise/parentage in the electricity industry .

With regards to valuation , it might seem rich again at $700-800mm considering that you can build 1 MW of wind power at around $1.5 million. With 175 MW of wind and biomass their existing assets without consideration about how much debt they have would be no more than $300 million . However the data is very scant now and I would post a much detailed valuation post when the prospectus comes out.