GSPC likely to bring out its IPO in 2012

The much-awaited Initial Public Offering (IPO) of Gujarat government-owned Gujarat State Petroleum Corporation (GSPC) could take place in 2012, if the market conditions and valuation of the issue are right, a senior company official said.

GSPC top brass had recently decided that the IPO would take place only in 2013, after gas started flowing from its Deen Dayal (DD) West field in KG basin. However, there is a possibility that the IPO may hit the capital market next year.

“We definitely want to come out with an IPO, but a decision about its timing is yet to be taken. But, we will not want to wait till gas production starts in 2013 to raise the funds,” a senior GSPC official said, requesting anonymity.

GSPC managing director Tapan Ray said that company was keen on coming out with an IPO, but added that it would happen when the time was right, and only if the company got proper valuation for the stake. He, however, refused to speak about the kind of funds the company will target to raise.

The state-owned company had planned to raise around Rs3,500 crore through an IPO last year, but the plans ran into rough weather owing to adverse market conditions and litigations over some questionable dealings. There were also several question marks on the execution of the field development plan of DD West.
“However, the DD West project has witnessed significant progress in the past few months. The risk associated with the project is considerably lower than it was last year,” said officials.
They pointed out that GSPC is now much closer to producing gas from its DD West field than it was in 2010.

The construction of wellhead platform has been completed, while contracts have been awarded for building the process platform, onshore gas terminal and submarine pipeline. Officials also pointed out that valuation of various subsidiaries of GSPC, such as GSPL, GSPC Gas, and others has gone up in the last one year or so. “These factors will have to be considered while deciding the pricing and size of the IPO,” they said.

Meanwhile, the state-owned entity has been meeting its huge funding requirements through internal accruals and government equity. It expects to produce 6 million metric standard cubic metre per day (mmscmd) of natural gas from DD West once the project goes on stream in mid-2013.