Reliance Power IPO Stories

'Grey' record by Reliance Power

Within few days of getting clearance from SEBI, Reliance Power's initial public offering (IPO) has created a new record in the Indian grey markets. A Rs 1 lakh application form of the IPO is fetching a price of over Rs 9,000 per form. This is considerably higher than the previous record-making price of Rs 7000 per form set by Adani group's Mundra Port & SEZ IPO a couple of months back.
Over 1 lakh shares are being traded daily in the grey markets even before the IPO's dates have been announced. According to grey market operators, currently the stock was being traded at a premium of around Rs 425 per share on Thursday, higher than the Rs 395-400 price a day before.
The IPO, which is expected to open on January 15, 2008 and closing on January 18, 2008, is being priced in the range of Rs 415-Rs450. For Rs 1 lakh application form, the rates are over Rs 9000 for fully paid-up shares and over Rs 6000 for partly-paid up shares.

The trading in grey market started couple of days back with premium quoted at Rs 340-350. Since the IPO dates were not announced, the volume was low on opening, but after the recent announcement of issue opening and price range, the volume has picked up substantially. SEBI had cleared Rel Power's issue on December 28, 2007 with a condition that 20 per cent of the promoters capital should be locked-in for a period of five years instead of normal lock-in period of three years.

Reliance Power Ltd, which is Anil Dhirubhai Ambani Group (ADAG) promoted company, was created as a separate company from Reliance Energy Ltd (REL) to handle the power generation business of the group. The company has 12 power projects under development with a total estimated cost of Rs95,591 crore. It recently won the 4000 MW ultramega power project (UMPP) at Krishnapatnam in Andhra Pradesh after having bagged the contract for another UMPP in Sasan, Madhya Pradesh.

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R-Power IPO: You can pay in phases

MUMBAI: Reliance Energy is going all out to woo retail investors for the upcoming initial public offer (IPO) of its subsidiary, Reliance Power. After deciding to offer shares to retail investors at a 5% discount to the price band of Rs 405-450, the Anil Ambani Group entity intends to provide this investor segment with a “staggered payment” option in this IPO. Accordingly, retail investors need to pay only 25% of the total investment amount at the time of submitting the application and the rest at the time of allotment on first call, a source familiar with the development said.
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By availing this option, the investor does not have to lock in the entire amount for which he has applied in the IPO. This means, if a retail investor intends to apply for 100 shares at Rs 450 per share (Rs 427.50 after discount), he would need to pay only Rs 10,687.5 (25% of Rs 42,750 while applying and the rest during allotment, as against the lumpsum of Rs 42,750. This option brings a level playing field for retail investors vis-à-vis qualified institutional buyers(QIBs), who are allowed to bid in an IPO with just 10% margin while submitting the bids in a public issue. Prominent public issues, which enabled the staggered payment options in recent times include ICICI Bank and Reliance Petroleum.

The Reliance Power issue, which would raise as much as Rs 11,700 crore by offering 26 crore shares, is likely to open on January 15 and close on Jan 18. The offer, which will be India’s biggest ever IPO, is expected to generate significant interest from both institutional and retail investors, going by the response in the unofficial grey market, analysts said. Rating agency Crisil has graded the Reliance Power IPO '4/5', an indication that the fundamentals of the issue are above average.

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Other Stories

Retail investors get discount in Rel Power IPO
Reliance Power to be listed in early Feb
Grey mart: Rs 1L in Rel Power IPO will earn 9% in 20 days
Power cos plan to raise $10 bn from primary market & pre-IPO placements


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