Sept. 15 (Bloomberg) -- Jindal Steel & Power Ltd., Asia’s best performing steel stock, may sell shares in a unit to partly fund a 134 billion rupee ($2.8 billion) plan to more than triple its electricity generation capacity in India. A quarter of the funds will come from selling a stake of at least 10 percent in Jindal Power Ltd. in an initial public offering, and the rest from debt, Deputy Managing Director Sushil Maroo said in a telephone interview yesterday. The share sale will be completed in the financial year ending March 31, he said, without giving details of the unit’s borrowing plans. Power companies in India have raised almost $2 billion through initial share sales in the past two months to tap investor appetite for electricity stocks as the country plans to almost double generation capacity in the five years to March 2012. Jindal Power plans increase the capacity of its 1,000 megawatt plant in central India to 3,400 megawatts, enough to power 680,000 urban Indian homes, according to Maroo. “This is probably one of the best among steel and power companies,” said Niraj Shah, a Mumbai-based analyst at Centrum Capital Ltd. “The market realizes that it needs funds to grow bigger and will value it accordingly.” Jindal Steel has more than tripled in Mumbai trading this year and is the best performer on the MSCI AC Asia Pacific Materials Index, comprising 71 mining and steel companies across Asia and Australia. Prime Minister Manmohan Singh has pledged to spend 569.6 billion rupees to add power plants and transmission lines in the year to March 31. The government plans to add 78,700 megawatts of generation capacity in the country in the five years to March 2012 and 100,000 megawatts in the following five years. ‘Huge Demand’ India, the world’s second fastest-growing major economy, faces peak-hour shortages of 12.6 percent this year, according to the Central Electricity Authority. “There’s huge demand and a vacuum that needs to be filled,” Maroo said. “We plan to begin work on regulatory requirements soon,” he said, referring to the planned sale. NHPC Ltd., the Indian hydroelectric power producer, raised 60.4 billion rupees in an initial offer this month, while Adani Power Ltd., run by Indian billionaire Gautam Adani, raised 30.2 billion rupees. Energy companies may raise as much as $3 billion in India this year, Angel Broking Ltd. said in a July report. JSW Energy Ltd., a unit of group company JSW Steel Ltd., also plans to sell shares to fund expansion. JSW Energy is run by Sajjan Jindal, the elder brother of Naveen Jindal, vice chairman and managing director of Jindal Steel. Rivals Tata Power Co. and Indiabulls Power Ltd. plan to go to the market to benefit from the government target of adding 78,700 megawatts of capacity in the five years ending 2012. Reliance Power Ltd. raised $3 billion in January last year in India’s biggest initial public offer. Jindal Steel’s profit increased to 9.88 billion rupees in the three months ended June 30 from 4.44 billion rupees a year earlier, according to a July 29 company statement. Sales rose 27 percent to 27.6 billion rupees.

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