The group, led by billionaire industrialist brothers Shashi and Ravi Ruia, is looking to sell 20-25 per cent shares of its energy (oil and power) business, to raise USD 2.5-3.0 billion (about Rs 14,000 crore) to part finance its estimated Rs 40,000 crore investment plans in the next 3-4 years.
The proposed initial public offer could give Essar's energy business a valuation of about USD 12 billion (nearly Rs 56,000 crore), sources close to the development said.
When contacted, an Essar Group spokesperson said, "Essar group is always looking at a range of different funding options but has not yet made any specific decision with regard to further financing."
The share sale would possibly make it the largest ever public offering by an Indian entity -- surpassing even that of Anil Ambani group's Reliance Power that currently holds the record for raising Rs 11,800 crore two years ago.
Meanwhile, quoting sources, the UK daily Financial Times said, "JP Morgan and Deutsche Bank have been appointed to advice the company on the fund raising."
"The group works with a range of financial advisors to assist it (on fund raising)," the spokesperson added.
The Ruia brothers, with a fortune of USD 13.6 billion, are ranked India's fifth richest by Forbes magazine.
The group needs about Rs 40,000 crore over the next 3-4 years for expansion of its energy business, sources said adding that the requirement for power sector alone is pegged at about Rs 20,000 crore for second phase of capacity addition.
Besides, the next stage of expansion of refinery would require about USD four billion and another USD one billion for exploration and production of oil and gas in West Bengal and Gujarat.
Funds have already been tied up for raising the power generation capacity from 1,200 MW to 6,000 MW. In the second phase, the capacity is sought to be raised to 11,000 MW at an investment of about USD 4.5 billion.
Likewise, the group, the second largest private sector oil player in the country, is already working on expanding its refining capacity from 10.5 million tonne to 18 million tonnes and funds to the tune of USD 1.6 billion have been tied up.
In the next phase, the capacity is sought to be expanded to 34 million tonnes, a development that would require an additional about USD 4 billion (about Rs 17,000 crore).
Besides, the group is expediting work on exploration and production businesses where it plans to invest about Rs 4,000 crore in 3-4 years.
The Essar Group has interest in businesses ranging from steel to energy, power, communications and shipping to logistics.
The group is also looking at expanding the capacity of its oil business to 18 MT, from 14 MT currently, for which funds have already been tied up.