NHPC launches $1.25 billion IPO

Indian hydropower company NHPC launched a Rs60 billion ($1.25 billion) IPO on Friday. By the end of the first day of bookbuilding, the institutional tranche was six times covered.

The company is selling 1.67 billion shares at a price range of between Rs30 to Rs35 a share. The shares are broken up into three tranches: an institutional tranche, which consists of 981 million shares; a non-institutional portion, made up of 163 million shares; and a retail portion of 490 million shares. One source close to the deal said that it is already marketing at near the top of the range.

The Indian government holds NHPC's entire share capital at present. After the issue, it will hold 86.36% of the company.

State-owned NHPC is a power company that designs, builds and operates hydroelectric power plants in India. It currently has 13 power plants, located mostly in the north and northeast of the country, with a total capacity of 5,175MW. It is in the process of building another 11 hydroelectric plants that will increase its capacity by 4,622MW. Another five plants are awaiting government approval.

Incorporated in 1975, NHPC has had plenty of time to establish itself as India's leading hydropower company; its nearest rival is Jaiprakash Hydro, which has only 300MW of capacity. In fact, it is India's second largest power company, second only to NTPC, which generates 30,000MW from a diverse range of sources.

The company will use around two-thirds of the proceeds from the IPO to finance the construction of seven hydropower projects. All of these projects are expected to be completed by the end of 2012. The largest plant, and the last scheduled to be completed, is the Subansiri Lower plant, which will have an installed capacity of 2,000MW.