Bankers, beware! India stares at a power debacle 20 times bigger than Enron

Enron Corp. is long gone, but the scandal it left behind in India has beguiled the country’s lenders for almost two decades.

However, if the bankers who financed the US energy company’s unviable power plant in Maharashtra state aren’t ruing that 2,000-megawatt debacle any more, it’s only because they’re now staring at a mess 20 times bigger.

India’s total electricity-generation ability is 344,000 megawatts, a 72 per cent increase over six years. The country, notorious for its outages, still doesn’t have a power surplus. But coal-fired plants in the private sector that ran at 84 percent capacity utilization at the start of the decade are struggling to stay alive with load factors of 55 per cent. As much as 40,000 megawatts of capacity — equal to 20 Enron plants — has become stressed assets for the banking system.

HDFC Bank has picked arrangers for $2.4 billion share sale: Sources

India’s HDFC Bank Ltd, the world’s most-expensive lender, has appointed arrangers including Bank of America Corp, Morgan Stanley and Credit Suisse Group AG for a Rs 155 billion ($2.38 billion) planned share sale, people with knowledge of the matter said.

The lender has also appointed JPMorgan Chase & Co, Edelweiss Financial Services Ltd, IIFL Holdings Ltd and JM Financial Ltd for the offering, the people said asking not to be identified because the information is private. The sale process will begin as soon as the lender gets the required regulatory approvals, they said.

HDFC Bank plans to raise the bulk of the funds from international investors through a sale of American depository receipts, with the rest to come from selling stock in India, the people said. The money will be used to boost the lender’s capital buffers and support its growth plans for several years, Paresh Sukthankar, deputy managing director of HDFC Bank said in January.