Patel Engineering mulls IPO for power arm

Patel Engineering will take a decision on a likely equity issue of its power generation subsidiary, Patel Energy, in the next 10-15 days. The company is waiting for some environment clearances for its power projects. Once they are in place, it will finalise its fund raising plan.

The Mumbai-based civil engineering and construction company is already in talks with potential strategic investors such as public sector enterprises and power equipment makers. Some strategic investors have also shown interest in picking up a stake in the company. It may place 5-10% with strategic investors before the IPO.

The company plans to dilute up to 49% stake in the subsidiary going ahead. Patel Energy plans to set up a 1,200 mw thermal power plant in Tamil Nadu and a 120 mw hydropower plant in Arunachal Pradesh. The total capital expenditure on the two projects will be Rs 6,800 crore over the next four years. While the company had acquired land required for both the power projects, it has received environment clearance only for the Tamil Nadu unit.