India-focused wind power generation developer Caparo Energy raised £50.2 million at 115p a share to invest in new generating capacity when it joined London’s Alternative Investment Market on 12 October.
The net proceeds of the placing were £46.3 million. The cash will be spent on purchasing existing projects from Suzlon Energy and to provide working capital for the business.
Suzlon, which has granted Caparo first refusal over its projects between 50MW and 100MW in size, will deliver up to 3,000MW of projects. In return Suzlon will receive advances totalling up to $167.9 million from Caparo, payable in four instalments over a period of three years.
The acquisition of further generating capacity after the initial purchase will be funded by a combination of equity and debt. Caparo has already secured outline terms of a $102 million lending facility from IDFC.
The company’s strategy is to acquire and develop 5,000MW of generating capacity by 2017. Caparo hopes to have taken on the 3,000MW of Suzlon projects by 2016 and add the rest of the capacity by the following year.
Prospects for Indian renewable power companies look bright given the expected demand in that country. Current generation capacity of 163GW is not sufficient to maintain the present level of economic growth, and there are already blackouts. Consequently, the Indian Government is targeting generation capacity of 342GW by 2017.
Favourable tariffs, incentives and Renewable Energy Certificates mean that the market is skewed towards wind farms, with 15% of power needs expected to come from wind by 2030. India requires a slightly different technology from Europe because wind speeds there tend to be lower.
Caparo says that it will consider paying a dividend when it has developed at least 500MW of capacity.
Market: AIM
Symbol: CEL
Price: 113p
12 month high/low: 120p/113p
Market cap: £185m
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