Essar Energy cuts IPO price amid volatile markets: source

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India's Essar Energy has cut the asking price for its initial public offering (IPO) on the London Stock Exchange due to volatile financial markets, a source familiar with the matter said.

The firm has reduced the pricing for the IPO to 420 pence (6.45 dollars) a share from a previous range of 450 to 550 pence a share, the source said. This would value IPO at around two billion dollars.

It had hoped to raised around 2.5 billion dollars.

Trading in the power, oil and gas exploration company was due to start Friday but now could be delayed "by a few days" and is expected Tuesday, the source said.

An Essar Energy official declined to comment.

The company plans to sell up to 25 percent of its share capital.

"Essar has re-issued the price to ensure a successful debut, attract more investors and leave more on the table," the source said.

"Financial and economic uncertainty intensified in the week of book-building, with the Greek debt crisis looming large," the source added.

Global credit rating agencies downgraded the sovereign debt ratings of some troubled European economies in recent days, with Greece lowered to "junk", sparking financial market volatility.

The source said investor response to Essar's IPO had been "encouraging" and that the offer had attracted a broad range of blue-chip international institutional investors.

Essar Energy, with assets of eight billion dollars in power, oil and gas businesses, has a total installed generation capacity of 1,220 megawatts.

It aims to use the money raised to hike its power generation capacity, expand refining operations and carry out exploration and development of its oil and gas blocks.

Essar Energy is made up of the power business and the oil and gas businesses held within companies owned by Essar Global Ltd., a unit of Essar Group.

The diversified Essar Group was founded more than four decades ago by billionaire brothers Shashi Ruia and Ravi Ruia.

© 2010 AFP

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