Banpu uses IPO to fund growth
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Banpu uses IPO to fund growth

Banpu's solar power project in Japan. The company aims to raise its power-generating capacity to 4,300 megawatts by 2020.
Banpu's solar power project in Japan. The company aims to raise its power-generating capacity to 4,300 megawatts by 2020.

Banpu Power Plc expects its 648.5 million initial public offering (IPO) shares to start trading on Oct 28, with the proceeds used to raise power-generating capacity to 4,300 megawatts by 2020.

Somruedee Chaimongkol, president and chief executive of SET-listed Banpu Plc, a coal mining company and the parent company of Banpu Power, said the capital raised from the IPO will go towards paying debts and expanding domestically and abroad.

Under the power expansion plan, Banpu Power aims to raise its equity-based power-generating capacity to 2,400MW in 2018 and 4,300MW by 2020, up from the current 1,913MW.

"What we expect to get from the IPO launch is a clear path to expand the power-generating business of Banpu Power," Ms Somruedee said. "At the same time, Banpu will maintain its coal mining and other energy-related businesses and this clear strategy would imply that the share prices of both Banpu and Banpu Power will be on a clear path as well."

Banpu Power is offering 648.5 million IPO shares with a par value of 10 baht a share. The price of the IPO is expected to be in the range of 18-21 baht per share. Banpu Power will finalise the price by Oct 17.

Some 210 million shares will be offered to eligible Banpu shareholders, while the remaining 438.5 million will be set aside for public and institutional investors.

Two institutional investors have already booked the purchase of a combined 110 million shares.

Banpu Power expects to raise 11.7-13.6 billion baht in funds from the IPO, which will also reduce Banpu Power shares held by parent Banpu to 78% from 100%.

Chief executive Voravudhi Linananda said the company has earmarked 10 billion baht from the funds raised from the IPO to repay debt to Banpu, which would help unwind nearly 100% of Banpu Power's debt.

The rest of the funds from the IPO will be used as operation cash and the company will set aside around US$700-750 million to expand its power-generating capacity to 4,300MW within 2020 as planned.

For the short-term plan to raise capacity to 2,400MW within 2018, the company aims to acquire a 90MW solar farm in China and an 88MW solar farm in Japan.

In addition, it will gain more power-generating capacity from a 1,320MW coal-fired power plant in China and a 1.5MW solar rooftop project in Thailand.

In order to reach the 4,300MW target in 2020, the company is seeking new investment capacity in Asia, particularly Indonesia, the Philippines and Vietnam. It is also interested in other renewable energy sources, including biomass, wind farms and solar farms in those targeted countries, Mr Voravudhi said.

The company signed a memorandum of understanding with the Vietnamese government to conduct a feasibility study to develop a 1,300MW coal-fired power plant in central Vietnam.

The coal-fired power plant is expected to be a 50-50 joint venture between Banpu Power and the Vietnam.

Mr Voravudhi said Banpu Power would spend around six months studying the project before submitting the plan for the Vietnamese government's approval.

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