Essar, one of India’s largest conglomerates, is planning to raise about $750m from an initial public offering of its infrastructure assets on the London Stock Exchange, as it seeks to attract foreign investors to power its expansion plans.
The flotation is expected to go through early next year, as the Mumbai-based company hopes market jitters – which have led many groups to postpone their listings in recent weeks – will subside by then, people close to the matter said.
The company, controlled by billionaire brothers Shashi and Ravi Ruia, has hired JPMorgan and Credit Suisse to help it merge its port and construction units into a new entity that would be listed as Essar Infrastructure, two sources said.
“The group is always looking at various options available to it for raising capital, given its significant growth trajectory,” said Essar Group. However, it added: “As of now there is no specific transaction proposed.”
The deal would be the second-largest overseas listing by an Indian company – following the $2bn IPO of Essar’s energy assets last year – and the latest in a series in London, which is becoming a top destination for companies from the subcontinent. Indian groups have collectively raised more than $8bn in London since Vedanta, the miner, listed on the LSE eight years ago.
Ibukun Adebayo, head of primary markets for India at the LSE, said 72 Indian companies were already listed in London – either on the main or junior market – and the LSE hoped that another 10 could list in the next 15 months.
Indian companies are among the keenest to list abroad. With borrowing costs on the rise at home – India’s central bank raised interest rates for the 12th time in 19 months in September to 8.25 per cent – exchanges such as the LSE offer companies an international profile and a wider pool of prospective investors.
Listing overseas also makes it easier to raise money for acquisitions in Europe and the UK. A growing number of Indian companies have been expanding their operations in the UK, as the emerging economic superpower seeks to extend its reach. In the past year alone, three conglomerates have acquired businesses based in the north of England.
Essar Energy’s London listing also signalled the beginning of the Ruia family’s ambition to transform the Mumbai-based group – which spans telecoms, shipping and construction – into a global company.
“Emerging Indian companies want to follow the examples of Vedanta and ArcelorMittal by listing in London and becoming global groups,” said Jagannadham Thunuguntla, head of research at SMC Global, a New Delhi brokerage.
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