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Essar Energy raises £1.2 billion in IPO

India-based Essar Energy, a subsidiary of the family-owned Essar Group, raised £1.2 billion on Friday in an IPO on the London Stock Exchange.

The company reduced the share price from between 450-550 to 420 pence per share on the morning of the listing and so raised less than the £2.5 billion it had initially hoped for. (Continue reading here)

Second-generation Prashant Ruia, vice chairman of Essar Energy, said: "We are happy the offer was fully subscribed within the price range initially announced. However, as this was our debut offering and given current market conditions, we decided on a small reduction in price for our new investors."

Despite the reduction in share price, the listing was still the largest on the London Stock Exchange since 2007, and the largest ever for an Indian company. The company sold 23.3% of shares, and so valuing it in total at £5.4 billion. After the listing, Essar Energy expects to join the FTSE 100.

Founders of the Essar Group Shashi and Ravi Ruia said in a joint statement: "The offer gives us a strong platform from which to deliver our significant pipeline of growth projects. We have been humbled by the interest shown from a broad range of high quality blue chip international investors. They have shown a very high interest in the Indian growth story and confidence in Essar Energy's ability to meet the growing need for power, oil and gas in India."

The Essar Group, which is controlled by Shashi and Ravi, will maintain the other 76.7% of Essar Energy. March saw the group showcase its expansion intentions when it purchased the US-based Trinity Coal Partners LLC for $600 million. (Continue reading here)

The group, which Shashi and Ravi founded in 1969, has revenues of $15 billion with company interests in steel, energy, power, minerals, telecoms and shipping. The family still owns a majority share in all the group's subsidiary companies and the six-member board is made up entirely of first and second-generation family members.

Picture: An Essar refinery in India

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