Last checked at 30 May 2008 08:00
| Embargoed for release at 08.00am | 30 May 2008 |
OPG Power Ventures plc
('OPG' or 'the Company')
First Day of Dealings
OPG, the profitable developer and operator of group captive power plants (GCPPs) in India, announces that its shares have today been admitted to trading on AIM, after recently raising £65.1m through its broker and nominated adviser Cenkos Securities. The Company's trading symbol is 'OPG'.
Summary:
| Placing price per new ordinary share | 60p |
| Number of ordinary shares being issued pursuant to the placing | 108,418,367 |
| Number of ordinary shares in issue following the placing | 286,989,795 |
| Gross proceeds of the placing | £65.1 million |
| Market capitalisation of the Company at the placing price at admission | £172.2 million |
| Admission to and first day of dealings on AIM | 30 May 2008 |
Information on OPG
OPG currently operates a 19.38 MegaWatt (MW) gas fired and waste heat electricity plant in Tamil Nadu, India. In addition, the Company and its operating companies (the "Group") has a 10 MW plant due to commence production in the third quarter of 2008 and a further four plants totalling 424 MW by the third quarter of 2010. The Group also has plans to develop further plants with a combined capacity of 5634 MW.
The Company is managed by a team with an established track record in developing power projects in India, and intends to build further power plants focusing on the group captive model servicing industrial and commercial consumers using the open access and grid transmission facilities provided under the Electricity Act 2003.
OPG's project pipeline is illustrated below:
| Plant | Name | (MW) | Type | Fuel type | Location | Date |
| In operation | ||||||
| 1 | OPG Energy Private Limited ("OPGE") | 18 | Group captive | Natural Gas | Tamil Nadu | In operation |
| 2 | OPGE | 1.4 | Group captive | Waste Heat | Tamil Nadu | In operation |
| Under implementation and construction | ||||||
| 3 | OPG Renewable Energy Limited ("OPGRE") | 10 | Group captive | Waste Heat/Coal | Tamil Nadu | Third quarter of 2008 |
| 4 | OPG Power Generation Private Limited ("OPGPG") | 77 | Group captive | Coal | Tamil Nadu | First quarter of 2009 |
| 5 | OPG Power Gujarat Private Limited ("OPGG") | 2x 135 | Group captive | Coal | Gujarat | First quarter of 2010 |
| In development | ||||||
| 6 | OPGPG | 77 | Group captive | Coal | Tamil Nadu | Third quarter of 2010 |
| 7 | OPG New Co | 2x 77 | Group captive | Coal | Tamil Nadu | First quarter of 2011 |
The Company has supply agreements for the full capacity of its operational plants and expressions of interest from group captive customers for a substantial proportion of the production capacity of the plants under implementation and construction. In addition, two of the projects, OPGPG and OPGG, have entered into an MOU with Tata Power Trading Company to supply up to 49% of the power generated.
Commenting on the successful fundraising and the Admission to AIM, Arvind Gupta, Managing Director of OPG, stated:
"OPG is pleased with the extremely strong response from the UK investment community to our business which is focused on addressing the significant power deficit issues in India. The funds raised gives OPG the ability to finance the building of a further four power stations, increasing our power output from the existing 19MW to over 450MW in less than two and a half years. We welcome our new shareholders and look forward to updating them on our progress in due course, whilst we deliver on our aggressive growth strategy."
For further information please contact:
| OPG Power Ventures plc | |
| Arvind Gupta, Managing Director | +44 78 34 94 68 71 |
| V. Narayan Swami, Finance Director | +44 78 43 59 53 94 |
| Martin Gatto, Senior Non Executive Director | +44 77 78 74 92 23 |
| Cenkos Securities | +44 20 73 97 89 00 |
| Stephen Keys | |
| Camilla Hume | |
| Buchanan Communications | +44 20 74 66 50 00 |
| Bobby Morse | |
| Nick Melson |
Background Information
1. Information on India
India has emerged as one of the fastest growing economies in the world, with a population of approximately 1.1 billion currently growing at 1.6% per annum making it the second largest populated country in the world. The economy has grown at an average rate of 8.8% for the last four fiscal years (2003- 2007) with the 2006-2007 growth rate of 9.6% being the highest in the last 18 years.
Although the total installed power generation capacity in India has increased from 83,295 MW in 1996 to 127,000 MW at 31 March 2007, India continues to face an average energy deficit of 9% with a peak deficit of 22% and demand for power is predicted to grow by between 10 to 12% per annum until 2017.
The aim of the Government of India's National Electricity Policy is to enhance the installed generation capacity by 100,000 MW in the ten year period to 2012. Part of the gap in demand is expected to be met from renewable energy and non-conventional energy sources, although the majority of the balance, however, is expected to be sourced from latest generation fossil fuel power plants.
The regulations under which the Company operates in India enables it to set the electricity tariffs directly with the power users, with neither the State Electricity Board (SEB) nor the state regulator having any jurisdiction over pricing. The Company is, therefore, able to supply assured power at prices that are significantly lower than those charged to the customer by the SEB.
The production of electricity by the Company's modern plants enables high margins to be achieved, despite selling power at a discount to the SEBs.
2. The OPG Business
The Company has been established to develop, own and manage power generation plants in India. The Company, managed by a team with an established track record in developing power projects in India, intends to build further power plants focusing on the group captive model servicing industrial and commercial consumers using the open access and grid transmission facilities provided under the Electricity Act 2003.
The directors believe that the prevailing and expected electricity demand and supply imbalance in India presents significant opportunities in the power generation sector for the Group. They further believe that the Indian government's vision of "Power for All" by 2012 will require aggressive growth and increased private sector participation in the supply of electricity. The Indian government has created a regulatory environment to encourage private industry investment in the power sector to assist in relieving the current demand and supply imbalance and the directors believe the Group is well placed to be a leader in this sector.
The core business of OPG is the ownership, development and management of small and medium sized GCPPs in India and it is the directors' intention that the Group becomes a leading operator of GCPPs in India. The power generated by the Group is and will be sold predominantly to industrial users in the vicinity of the plants.
3. Additional Projects
In addition to the projects described above, the Group has also evaluated various other projects and is in the process of finalising further development plans including:
OPGPG has obtained the necessary environmental clearance for the development of a second 77 MW plant on the site of OPGPG;
the Group has entered into an agreement to purchase additional land in Ennore, Chennai for two 77 MW coal based projects;
OPGE have signed an MOU with the government of Madhya Pradesh to establish a 1,000 MW plant in the state of Madhya Pradesh. The project is based on Indian coal;
OPGPG has signed an MOU with Cethar Energy Limited ("CEL") to establish a 4x 135 MW project in Maharashtra. It is intended that the Group will have a 74% equity interest in the project. CEL has been allotted land in Dighe, Raigad district, Maharashtra and the land is being transferred to an SPV;
OPGPG intends to develop a 4x 135 MW coal based project in Tuticorin, Tamil Nadu and land has been identified for this project;
OPGE has been involved in a bid, together with Lanco Infratech Limited ("Lanco Infratech"), for the 1800 MW project for the Talwandi Sabo Power Project in Punjab in which the Company would have an 8% economic interest; and
OPGE has been involved in a bid, along with Lanco Infratech, for the 1,600MW project for the Dhopave Coastal Power project in Maharashtra in which the Company would have an economic interest of 13% in the project.
4. Use of proceeds
The net proceeds of the placing will be used by the Group to complete OPGPG and OPGG and to pursue the development of additional power plants. The directors believe that admission will raise the Group's profile, giving it access to a greater range of projects and enabling future access to capital markets.
The directors also believe that admission will secure a more diversified shareholder base and provide financial stability which will allow the Group to obtain finance on better terms thereby improving returns for its shareholders.
5. Directors
Arvind Gupta, Managing Director and CEO - aged 47
Having graduated with a degree in commerce from University of Madras, Mr Gupta joined the OPG family business, OPG Enterprises, in 1979. He gained experience in various divisions of the business including flour milling, steel production and logistics, becoming President of Kanishk Steel. Mr Gupta managed OPG Enterprises' real estate division, completing residential, commercial and logistics projects. Having identified the opportunities in power generation, Mr Gupta took responsibility for developing this division of Kanishk Steel with initial projects in wind power generation in 1994. He was a pioneer in GCPP, in Tamil Nadu and oversaw the development of OPGE. He has been responsible for the construction and development of the power plants for OPGRE and OPGPG.
V. Narayan Swami, Finance Director - aged 57
Mr. Swami has over 30 year's experience in a variety of finance and management positions. Having started his career with the State Bank of India he moved to Ashok Leyland Limited, one of India's leading industrial companies in 1976. Between 1982 and 1992, he held a variety of positions within Standard Chartered Bank, including as Senior Manager - corporate for Southern India. Following three years with Trans Arabian Investment Bank, Mr Swami joined Essar Global Limited, one of India's largest companies in 1995, subsequently becoming CFO of Essar Telecom Group. During this time, he played a key role in the entry and subsequent planned exit of Swisscom from the venture along with the simultaneous investment of Hutchison Whampoa. After a period pursuing other interests, Mr Swami spent a year as group CFO of Bombay listed Best & Crompton Engineering before joining the Group in 2007.
Mr. M.C. Gupta, Non-Executive Chairman - aged 69
Mr Gupta is a retired senior civil servant of the Indian Administrative Service ("IAS"), the premier civil service of India. As an IAS Officer, Mr Gupta has held senior civil service appointments, including Chief Secretary to the state government of Haryana and Secretary to the Department of Industry of the Government of India, New Delhi. Mr. Gupta serves on the boards of a number of public companies in India as an independent director including Bhansali Engineering Polymers Ltd., and Lumax Industries Ltd. Mr. M C Gupta is not related to either Ravi Gupta or Arvind Gupta.
Martin Gatto, Non-Executive Director - aged 58
Mr Gatto has considerable experience as Chief Financial Officer of a number of large public companies, most recently implementing successful turnaround strategies at British Energy Plc, Midland Electricity plc and Somerfield plc. Prior to that he gained international experience as Chief Financial Officer at Hilton International Co. where he was also responsible for business development and property. He is a graduate of Brunel University and is a Fellow of the Chartered Institute of Management Accountants. He currently serves as Non-Executive Chairman on the board of AIM listed company, Neutrahealth plc.
Patrick Michael Grasby, Non-Executive Director - aged 64
Mr Grasby has held a number of senior positions in the UK and international power sector and is currently a non-executive director at Drax Group plc, where he sits on the Audit, Remuneration and Nominations Committees and Chairs the Health and Safety Committee and is a member of the British Electricity Association and the World Energy Council. He retired from International Power in 2002, where he held a senior vice president position for global operations. During his career he has held a number of senior positions in the UK and international power industry with the Central Electricity Generating Board and National Power. He was manager of Drax Power Station between 1991 and 1995, and director of operations for National Power's portfolio, with responsibilities for over 16,000 MW of generating capacity, until 1998. Following the demerger of National Power in 1999, he joined International Power as senior vice-president, continuing with his international directorships and leading a major consortium in the Czech Republic. Mr Grasby has experience of being a director of power companies in Portugal, Turkey and Pakistan. Mr Grasby is also a director of Strategic Dimensions, an executive recruitment business. He is a Chartered Engineer, FIET and FIMechE.
Ravi Gupta, Non-Executive Director - aged 51
Mr Gupta is one of the founders and the Chairman of Kanishk Steel (listed on the Bombay Stock Exchange since 1991). Mr Gupta has been associated with the flour milling industry for many years having worked for family flour milling business, Salem Roller Flour Mills. In 1988 he set up a new flour mill, Salem Food Products Limited, which he continues to manage. Ravi Gupta is the brother of Arvind Gupta.
No offer or invitation to purchase or subscribe for shares is being made at this time. This document does not constitute or form part of any offer or invitation to sell, allot or issue or any solicitation of any offer to purchase or subscribe for any securities in any jurisdiction, nor shall it (or any part of it) or the fact of its distribution form the basis of or be relied upon in connection with, or act as any inducement to enter into any contract or commitment for securities.
Any such offer or invitation will be made solely in or by reference to the AIM admission document published on 23 May 2008 and any acquisition of shares in the Company should be made only on the basis of the information contained in the AIM admission document. The information contained herein is for information purposes only.
This announcement is the sole responsibility of the Company. No undertaking, representation, warranty or other assurance, express or implied, is made or given by or on behalf of the Company, Cenkos Securities plc ("Cenkos"), the Company's nominated adviser and broker or any of their respective affiliates or any of such persons' directors, officers, partners, employees, agents or advisers or any other person as to or in relation to the accuracy or completeness of this announcement and no responsibility or liability is accepted by any of them for any such information or opinions or for any errors, omissions, misstatements, negligence or otherwise for any other communication written or otherwise. Notwithstanding the aforesaid, nothing in this paragraph shall exclude liability for any undertaking, representation, warranty or other assurance made fraudulently or which cannot be excluded under the law of the applicable jurisdiction.
Cenkos, which is authorised and regulated in the United Kingdom by the Financial Services Authority, are advising the Company and no one else in connection with the proposed placing and admission to AIM ("Placing and Admission") and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Cenkos (save, in relation to persons resident in a member state of the European Economic Area ("EEA"), as may be required to satisfy their obligations to persons who are "professional clients" or "eligible counterparties" within the meaning of Article 4(1)(11) and Article 24 (2), (3) and (4), respectively, of Directive 2004/39/EC ("MiFID")) nor for providing advice in relation to the Admission and the Placing or any other matter referred to in this announcement.
The distribution of this announcement in certain jurisdictions may be restricted by law. No action has been taken by the Company, or Cenkos that would permit an offer of shares or possession or distribution of this announcement or any other offering or publicity material relating to the Placing and Admission in any jurisdiction where action for that purpose is required. Persons into whose possession this announcement comes are required by the Company and Cenkos to inform themselves about, and observe, any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.
Cenkos has not approved (for the purposes of section 21 of the Financial Services and Markets Act 2000 ("the FSMA")) the contents of, or any part of, this announcement. Members of the general public are not eligible to take part in the Placing. This announcement is only being addressed to and directed at persons who have professional experience in matters relating to investments and:
(a) in the United Kingdom, persons who are: (i) a "qualified investor" within the meaning of Section 86(7) of FSMA; and (ii) a "professional client" or an "eligible counterparty" within the meaning given in COBS 3.5.1 and COBS 3.6.1, respectively, of the FSA Conduct of Business Sourcebook as at 1st November 2007; and (iii) who have professional experience in matters relating to investments falling within Article 19(5) of the United Kingdom Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 as amended (the "Order") or are high net worth companies, unincorporated associations etc. falling within Article 49(2) of the Order; or
(b) in other member states of the EEA, persons who are: (i) a "qualified investor" within the meaning of Article 2(1)(e) of the Prospectus Directive (Directive 2003/71/EC); and (ii) a "professional client" or an "eligible counterparty" within the meaning of Article 4(1)(11) and Article 24 (2), (3) and (4), respectively, of MiFID; or
(c) in any other country, territory or possession, persons to whom it is otherwise lawful to address it to and direct it at.
The securities to be offered in connection with the proposed Placing and Admission have not been, and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act") or under the securities legislation of any state of the United States. The relevant clearances have not been, and will not be, obtained from the Securities Commission of any province or territory of Canada; no document in relation to the proposed Placing and Admission has been, or will be, lodged with, or registered by The Australian Securities and Investments Commission; and no registration statement has been, or will be, filed with the Japanese Ministry of Finance in relation to the proposed Placing and Admission or the securities to be offered in the proposed Placing and Admission. Accordingly, the securities to be offered in the proposed Placing and Admission may not, directly or indirectly, be offered or sold into or within the United States, Canada, Australia, South Africa, the Republic of Ireland, Japan or any other jurisdiction where it may be unlawful to do so (except in accordance with applicable securities laws) or offered or sold to a resident of the United States, Canada, Australia, South Africa, the Republic of Ireland, Japan or any other jurisdiction where it may be unlawful to do so (except in accordance with applicable securities laws).
Information contained in this announcement may include "forward-looking statements". All statements other than statements of historical facts included in this announcement including, without limitation, those regarding the Company's financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to the Company's business) are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important facts that could cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future. These forward-looking statements speak only as at the date of this announcement. The Company expressly disclaims any obligations or undertaking to disseminate any updates or revisions to any forward-looking statements contained in this announcement to reflect any changes in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
Information contained in this announcement cannot be relied upon as a guide to future performance.