Having entered on a high spending mode to develop the KG-8 gas discovery in the KG-OSN-2001/3 offshore block (now renamed as Deendayal) close to Andhra Pradesh coast, GSPC is now up for private placement of 5-7 per cent equity shares to raise Rs 1,000-1500 crore. According to market sources the private placement is expected to be over in a couple of months.
The private placement will finance part of the Rs 3,500-crore capex plan of the company on creation of offshore and onshore facilities for the KG asset. The company has already arranged close to Rs 2,500 crore worth of debt to part finance the project. In addition, the Gujarat government recently infused Rs 500 crore equity capital in the company.
Dilution of state's stake
Earlier in January 2010, GSPC raised Rs 990 crore through private placements through fresh issue of equity shares and convertible debentures to part finance the same project. Of the total placement, Rs 690 crore was raised through issue of nearly 86 lakh equity shares of a face Rs 10 each placed at a price of Rs 800 each. The rest Rs 300 crore was raised through issue of debentures. The issue diluted the stake of the State Government by 5.78 per cent from as high as 100 per cent.
According to company sources, the State Government has already granted its approval to the company to dilute up to 20 per cent of the equity to raise equity finance for the KG development project.
GSPC IPO in 2012
While there is pressure from the institutional investors to get the company listed, the GSPC management appears to be not in a mood to make any hasty move to hit the market. The company had aborted its last IPO move in 2009, in the face of differences over valuation.
“As things stand now, we can expect GSPC IPO in 2012, when we will be closer to start production from the asset. Meanwhile, there is an opportunity to raise finances by unlocking value in our city-gas subsidiaries like GSPC Gas and Sabarmati Gas,” a company source said adding that GSPC Gas is expected to hit the capital market in “this year” (2011), ahead of the group flagship, GSPC.
GSPC Gas IPO in 2011
Owned by GSPC and its listed subsidiary Gujarat State Petronet Ltd (GSPC), GSPC Gas currently supplies 3.76 million standard cubic metre of gas a day (mmscmd) to 100 locations in Gujarat.
According to sources, the company (GSPC Gas) posted a little over Rs 130 crore net profit on a revenue of Rs 2,000 crore during the last fiscal.
“GSPC Gas is today one of the largest CGD player in the country with a huge industrial and commercial subscriber base,” a source said.
Market sources suggest that GSPC has already approached merchant bankers to explore the opportunity of the GSPC Gas IPO in 2011.