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Gujarat State Petroleum Corporation may go in for private placement of 5-7 per cent equity shares to raise Rs 1,000-1,500 crore. According to market sources, the placement is expected to be made in a couple of months.
Money raised will part-financé its Rs 3,500-crore capex plan to create offshore and onshore facilities for the KG asset. The company has 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.
Next week, the company will start drilling to develop the KG-8 gas discovery on the Western part of the KG-OSN-2001/3 offshore block (now renamed as Deendayal) close to Andhra Pradesh coast.
Dilution of Govt stake
Earlier in January 2010, GSPC raised Rs 990 crore via private placements, through fresh issue of equity shares and convertible debentures to part-finance this project. Of the total placement, Rs 690 crore was raised through issue of nearly 86 lakh equity shares of Rs 10 face value at Rs 800 each. The rest was raised through issue of debentures. The issue diluted the stake of the State Government by 5.78 per cent from 100 per cent.
According to company sources, the State Government has 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.
IPO plans
While there is pressure from institutional investors to get the company listed, the GSPC management does not seem keen on an IPO now.. The company had aborted its IPO move in 2009 following differences over valuation.
“As things stand now, we can expect the IPO in 2012, when we will be closer to starting production from the asset. Meanwhile, there is an opportunity to raise finances by unlocking value in our city-gas subsidiaries of 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.
Owned by GSPC and its listed subsidiary Gujarat State Petronet Ltd (GSPC), GSPC Gas 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.
Market sources suggest that GSPC has approached merchant bankers to explore the opportunity of the GSPC Gas IPO in 2011.
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