R-Power to spend Rs 3,000 cr for mines to fuel Sasan project

Awaits government nod for plan to develop mines in a strategic partnership with North American Coal Corporation.

Reliance Power Limited, the flagship company of the Reliance Anil Dhirubhai Ambani Group(ADAG), plans to invest about Rs 2,500-3,000 crore over a period of three years, to develop three coal mines to fuel its Sasan Ultra Mega Power Project in Madhya Pradesh.

“We have submitted the plan for the pit-head mines, to be developed in a strategic partnership with the North American Coal Corporation (NACC), to the ministry of coal and expect the final clearance within a few months,” a top Reliance Power, official told Business Standard.

NACC, the largest lignite coal producer and among the top ten coal producers in the US, will provide technical assistance, including evaluation of geological data, mine planning and design, supervision of mining operations and training for Reliance professionals, according to the memorandum of understanding (MoU) signed with Reliance Power.

Biggest ever
Sources said the coal mining plans of Reliance Power for the Sasan project would be one of the largest and unprecedented in India, with advanced coal handling equipment.

One of the transportation vehicles (of 240 tonne capacity) that will be used is equivalent to the size of four railway wagons.

The company has placed orders for modern coal handling equipment with four to five leading manufacturers in the US and Europe, said the official.

Sasan Power Limited (SPL), a fully owned subsidiary of Reliance Power, has about 750 million tonnes of coal reserves at Moher (capacity of 402 mt), Chattrasal (150 mt) and Moher-Amlori Extension (198 mt), over an area of about 6,000 acres in and around the proposed power project.

Coal requirement
The Rs 18,300 crore Sasan project is scheduled to go on-stream with the first 660 mw unit of the 3,960 mw project to go on-line ahead of schedule within a few years. The ultra mega power project will require about 15 million tonnes of coal annually.

According to sources, Reliance Power was among the first to submit a coal development plan for captive coal blocks allocated in the past few years.

The Sasan project was awarded to Reliance Power in August 2007 and the coal development plan was developed and submitted within few months, said the official.

First of nine
In the case of some captive coal blocks allocated to power producers such as National Thermal Power Corporation, the development plan has not been submitted even after nearly five years, the sources said.

Sasan is the first of eight or nine such mega power projects planned in the country, and was scheduled to be fully commissioned by April 2016, with six 660 mw units planned.

However, Reliance Power is working to commission the project ahead of schedule by fast tracking the entire process, said the official.

Reliance Power currently has access to coal reserves of about one billion tonnes in India and abroad, including a coal mine in Indonesia, which it acquired recently.

In India, the company has access to another 150 million tonnes of coal, along with five others who were allocated mines in Orissa and Chattisgarh.

Reliance Power is setting up 13 projects with a total capacity of over 28,200 mw. Seven of them are coal fired projects. Coal will be imported for the Krishnapatanam and Shahanpur projects.

P B Jayakumar / Mumbai March 26, 2008

Source : http://www.business-standard.com/

Month's wait for R Power bonus to see light of day

MUMBAI: It's 23 days since chairman Anil Ambani declared a 3:5 bonus share issue in Reliance Power on Feb 24. The move aimed at compensating investors for the sharp fall in stock price two weeks after it listed.

“I have been personally concerned by the notional losses arising to millions of long term investors in Reliance Power, as a result of the adverse change in sentiment in global and domestic capital markets. We have taken this one-time measure, to protect and enhance value for all our long-term shareholders,” said Ambani.

Two days prior to the bonus announcement the stock had closed at Rs 416.85, down 7.36 per cent or Rs 33.15 from its issue price of Rs 450. A day after the declaration and first day of trade, Reliance Power shares rose 8 per cent.

Today the Reliance Power stock was at Rs 318.20 on NSE, up 0.84 per cent from Monday which saw the Sensex fall 950 points due to global turmoil.

The bonus issue would lower the cost per share to Rs 269 for individual investors 40 percent lower than the IPO price of Rs 430. The acquisition price would come down to Rs 281 for other investors, or 37 lower than the IPO price of Rs 450.

But investors looking for that succour will have to wait till April 21 when the results of the postal ballots seeking shareholders’ approval will be available. Then it will be a wait for the record date.

“Result of the postal ballot will be declared on Apr 21. After the results, we will intimate SEBI and will follow up the required regulations for bonus issue,” said Paresh Rathod, company secretary of Reliance Power, when contacted by ET Markets.

According to SEBI guidelines, a company must issue the bonus shares within six months from date of announcement.

Further, there are the eligibility criteria. Only shareholders holding shares on record date would be entitled to receive bonus shares. Original allottees from the IPO, but who have sold prior to record date, would not be eligible for the bonus shares.

This move is aimed at checking alleged detractors from a repeat situation of listing day on Feb 11, when the Reliance Power share ended 17 per cent lower.

On listing day, total 6.41 crore shares, or 28 per cent of the net offer to the public, were sold on the BSE and NSE combined.

Reliance Power had written to the Securities and Exchange Board of India seeking an investigation into the price fall, with Ambani accusing rivals for the share fall.

Around 11 crore shares have changed hands till date, according to NSE data. This makes for about 1/3 of total shares held by retail investors who will lose out on the bonus shares.

Reliance Power's IPO closed on Jan 18, receiving an overwhelming response, with commitments of nearly Rs 7,50,000 crore, from nearly 500 institutional investors and 5 million retail investors.

“In the current bearish scenario, if they (Reliance Power) fix the record date in April and the market remains volatile, there are chances the share price may go down significantly. The company is likely taking care about the timing for allotment,” said A Chauhan, fund manager at DMB Wealth Management.

Reliance Power investors show faith in Ambani

Mysterious text messages have begun circulating in Mumbai praising Anil Ambani, the Indian businessman.

The messages, saying “Thank God for Anil Ambani” for “standing by us in times of trouble”, were from anonymous correspondents.

EDITOR’S CHOICE
Lex: Reliance IPO bonus - Feb-25Reliance Power down 17% on trading debut - Feb-11Indians hold their breath for Reliance debut - Feb-10India’s market for new offerings falters - Feb-08Reliance subsidiary announces IPO - Feb-04Reliance subsidiary announces IPO despite tough conditions - Feb-05They appeared to be responding to a move by the billionaire to issue free bonus shares to compensate investors for a sharp fall in the share price of his company, Reliance Power, after its stock market trading debut.

The group yesterday announced the details of the bonus issue, saying it would issue investors other than the controlling shareholders with three new shares for every five shares they bought in the initial public offering.

The highly unusual measure, which in effect lowers the IPO price by 37.5 per cent below the original price of Rs450, comes after a plunge in Reliance Power’s stock of 17 per cent on its debut two weeks ago.

It has since recovered to close about 7 per cent down on Friday, but the poor performance is in sharp contrast to the hype that surrounded the launch of the IPO.

While investors have welcomed the bonus share issue, it has alarmed many analysts.

They say it increases moral hazard by insulating investors from the true risks involved in buying stocks, particularly start-ups such as Reliance Power, which plans to roll out a national network of power plants but does not yet have any operating assets.

Underlying the move, however, is a deeper phenomenon common in Asian markets: the close relationship between the region’s biggest tycoons and their retail investor base and the need to maintain that good faith at all costs.

In India, no group commands more investor loyalty than the Ambani family.

Anil’s father, Dhirubhai Ambani, is credited with founding the country’s retail equities culture three decades ago in the listing of his group, Reliance Industries.

Since then, the rich returns from investing in Reliance stock have enabled Indians to stage lavish weddings for their daughters and send their children abroad for their education.

“We have faith in the company,” said Ram Swaroo, one of a crowd of retail investors gathered on the sunny street outside the Bombay Stock Exchange.

Mr Swaroo said his initial investment of Rs5,000 in Reliance 30 years ago had grown eightyfold to Rs400,000.

The closest example elsewhere in Asia to the Ambani family’s unwritten contract with its investors is Li Ka-shing, Hong Kong’s richest tycoon. He has also mostly avoided burning his retail investor base on IPOs.

David Webb, editor of Webb-site.com, a corporate governance watchdog, said the nearest equivalent to Reliance’s bonus issue occurred in China.

Investors hurt by a 2001 bubble in state-owned shares were issued bonus stock from the government’s holdings to compensate them.

But Indian analysts argue that, rather than relying on corporate benevolence to bail out retail investors, the government should tighten regulations to either prevent hyper-speculative stocks with no assets or record from listing, or ensure that they are fairly priced.

Reliance Power, for instance, listed with a market capitalisation three times that of established rival Tata Power.

The irony, said Raamdeo Agrawal, joint managing director of Motilal Oswal Securities, which is based in Mumbai, is that companies that are already listed are subject to rigorous analysis while start-ups can make whatever claims they wish.

“You don’t have sales, you don’t have earnings, you are selling only hopes and dreams and these can be as big as you like,” he said.

By Joe Leahy
http://www.ft.com/

3:5 bonus from Reliance Power; effective price will be Rs 269

Mumbai, Feb. 24 Reliance Power will offer three bonus shares to its investors for every five held in an effort to compensate for the fall of its share price after its high decibel, record-breaking initial public offering last month.

The bonus shares will not be offered to the promoters – Mr Anil Ambani, Chairman of the company, and Reliance Energy (REL) – who hold 45 per cent stake each in Reliance Power.

Mr Ambani is reducing his holding in the company to preserve REL’s shareholding at 45 per cent, to make good the notional loss that REL would suffer on account of the bonus issue.



“I am contributing my personal shareholding of 2.6 per cent in Reliance Power to Reliance Energy,” he said, at a news conference here on Sunday after the boards of the companies approved the free issue of shares.

This contribution and the bonus offer would see Mr Ambani’s stake in Reliance Power diluted by around 5 percentage points to 40 per cent, with him relinquishing around Rs 5,000 crore “in the interest of 6 million shareholders”. The public shareholding will be 15 per cent, up from 10 per cent currently.

“I am personally concerned by the notional losses to millions of investors after change in the global and domestic market sentiment after the IPO,” he said.

The bonus issue will effectively reduce the Reliance Power’s share price by nearly 40 per cent to Rs 269 for retail investors (who paid Rs 430 a share) and by 37 per cent to Rs 281 for institutional investors.

The IPO had attracted Rs 7,50,000 crore worth of bids, raising Rs 11,500 crore for the company. A large number of investors had borrowed funds for the IPO hoping to make a profit from the listing premium. When it listed on February 11 below issue price (and continued to remain below it ever since), investor angst at the company predictably ran high.

The market reaction to this bonus announcement appeared mixed. One long time broker said it would make little difference since after any such issue of shares, the stock price typically goes down and investors may still find they have not gained much. “However, they may be more favourably disposed towards the group, which has lined up more IPOs,” said another broker.

After shareholder approval, the record date for the bonus shares would be communicated through the exchanges, Mr Anil Ambani said.

Allotment, refund issues plague Reliance Power investors

MUMBAI: Even as the board of Reliance Power meets on Sunday to consider a bonus share issue, there are cases of investors not having got the shares allotted to them or the refund money even 10 days after the stock listed on the exchanges on February 11.

One investor wrote in to say he was as yet unsure if he has been allotted the shares. Neither has he received the refund money.

Karvy Computershare, registrar to the mega issue, had a different reason every time the investor called in to know the status. Initially he was told he was allotted the shares and it would take a few days to get transferred to his account. Failing which, he was told his application was “suspect and put on hold.” He received a further shock when a call center executive told him his cheque had bounced.

Once the basis of allotment is decided, which was February 1 in the case of R Power, the shares in an IPO need to be credited to the applicants within two working days.

Another applicant was told that his refund money was sent as a cheque via registered post on Feb 9. However, the local post-office personnel said they had received no such letter.

On being contacted, a Karvy official said that around 2 per cent of the total applications or 1,00,000 applications were on hold for various reasons.

According to SEBI officials, in the past one week they had received over 1,800 complaints and had flagged off the company on them. In reply, company officials said all the grievances would be resolved in next 10-15 days. The company is expected to come out with a report on the status of allotment and refund next week.

Source : http://economictimes.indiatimes.com

Why did Reliance Power lost 17% on its debut at the exchanges?

MUMBAI: It’s well known that Anil Ambani’s Reliance Power lost 17% to close on Rs 372.50 against the issue price of Rs 450 on its debut on the stock exchanges. But what’s not known is that a handful of Mauritius-based foreign institutional investors (FIIs) and a domestic bank offloaded their entire or almost entire shareholding in the company within minutes of the opening bell.

The stock opened with a handsome premium at Rs 530 on NSE and Rs 547.80 on BSE at 9.55 am. But within four minutes, it went down by 26% to Rs 389.80 on NSE. The fall was even sharper on BSE by 28% to Rs 395. In other words, it fell almost 7% a minute, resulting in erosion of shareholders’ wealth of Rs 30,000 crore.

Reliance Power is well aware of the price hammering on the first day. Incidentally, all companies of Mr Ambani’s group were down by 10-20% on that day. In a letter written on February 15, Reliance Power has requested the market regulator to investigate the matter in line with the Sebi ( Prohibition of Fraudulent and Unfair Trade Practices) Regulations.

The letter, which was addressed to the Sebi chairman, has demanded the regulator investigate all relevant information and data from the stock exchanges, including the quantities of shares sold, the identity of the brokers and their clients, the pattern and timing of the sales and the funding of margins, stock lending under the FII route and P-notes.
The very nature of the stock trading demands that the price should move in both directions. So what’s so special about it? The answer, perhaps, lies in the way the FIIs exited from the counter within minutes by selling their shares at a price lower than their purchase cost.

A closer look at the trading data indicates that as much as 23.77 million shares, 10.4% of the total 228 million shares sold through the Reliance Power IPO, changed hands on the twin bourses of Mumbai within the first four minutes of trade. More interestingly, the entire sale took place at the price ranging between Rs 443 and 392, lower than the allotment price of Rs 450. “They did not mind to exit at a loss, but did not have the patience to continue for a few more days, forget months. Why did they apply for the issue?” asked a city-based broker who did not wish to be named.

Three FIIs sold out their entire allotment of 2.6 million shares each during the period. Five other FIIs sold almost their entire holdings - they sold 2.47 million, 2.46 million, 2.45 million, 1.99 million and 1.68 million, respectively while a domestic bank sold 1.69 million.

A person close to the development said some sell orders were made at progressively declining prices - completely irrational to a seller- pointing towards a concerted attempt at hammering at the counter. In some cases, the visible quantity of sale orders was much larger than the traded quantity, leading to the suspicion that large quantities were displayed to create panic, and they were withdrawn. “All this points out towards a possibility of a pre-meditated manipulation of the Reliance Power order book to create a negative sentiment,” he added.

The Reliance Power board will meet on Sunday to consider issue of bonus shares to the shareholders, excluding the promoters. The company said promoters would accept the dilution in their shareholding in the broader interest of investors.

The IPO had closed on January 18 by creating a history of sort when it got investment commitments of Rs 750,000 crore from nearly 500 institutional investors and five million retail investors. Subsequent to the closing of the IPO, the global and Indian equity markets suffered an extra-ordinary meltdown, with all benchmark indices down 15-20 % and leading Indian stocks lower by 20-40%.

Some people also blame the management for ‘over-pricing’ the issue. Indirectly, the management agrees to it by announcing that it will consider issue of free shares to the non-promoter shareholders. The stock on Wednesday closed at Rs 408.20 on BSE, 1.23% lower than Tuesday’s close.

ADAG offers free bonus shares to Reliance Power investors

New Delhi (PTI): Taking the investing community by surprise, the Anil Ambani group on Sunday announced to consider free bonus shares to all non-promoter shareholders in Reliance Power, while alleging that corporate rivals were pulling down share prices of all group companies.

Reliance Power also demanded a probe by market regulator SEBI into "a vicious and orchestrated campaign of market manipulation and market abuse unleashed by unscrupulous rival corporate interests to hammer down all Reliance ADA stocks".

The company said its board would consider the free bonus shares at a meeting next Sunday, February 24, to benefit over four million of its investors and the cost would be accepted by promoter group by way of diluting its shareholders.

The company said that promoters would accept the dilution in their shareholding in the broader interest of investors.

Besides a proposal for issuing free bonus shares to all categories of shareholders, excluding promoters, the board would also consider other measures that could reduce the cost of Reliance Power Ltd shares below the IPO price of Rs 430 per share for retail investors, and Rs 450 per share for institutional and other categories of investors.

The IPO had closed on January 18, 2008 with an overwhelming response of about Rs 7,50,000 crore in commitments from nearly 500 institutional investors and five million retail investors.

However, subsequent to the closing of the IPO, the global and Indian equity markets have suffered an extra-ordinary meltdown, with all benchmark indices down 15-20 per cent and leading Indian stocks lower by 20-40 per cent, the company said in a statement.

"In line with this global trend, the Reliance Power stock price has closed below the IPO price, since listing on February 11, 2008. From the time of opening of the Reliance Power IPO on January 15, 2008, the Sensex is down 13 per cent, while the Reliance Power stock is down 11 per cent from the IPO price for retail investors, and 15 per cent for other categories of investors," it noted.

The company said that the decline in the Reliance Power stock price has been compounded by an attempt to undermine the group's name and reputation, while causing losses to millions of genuine investors.

"In keeping with the Reliance ADA Group's fundamental and over-riding philosophy of creating value for genuine long term investors, the Board of Directors of Reliance Power will be meeting as above, to consider appropriate one-time measures which will result in reduction of the cost of Reliance Power shares below the IPO price," the company said.

Such measures would include a proposal for issuing free bonus shares, thereby protecting investors even from notional short-term losses on their shareholdings.

Reliance Power said it has the world's largest shareholder family of nearly 500 overseas and domestic institutional investors, and over 4 million retail investors and is implementing power projects with aggregate capacity of over 28,000 MW, by far the largest development pipeline in the country.

Source : http://www.hindu.com/

Reliance Power plans bonus share issue

MUMBAI (Reuters) - Reliance Power Ltd plans to issue bonus shares to all equity holders other than the founders, hoping to cheer retail investors after the firm's shares tumbled following a record $3 billion IPO.

Its board is scheduled to meet on Feb. 24 to consider issuing bonus shares and/or other measures which it said would effectively reduce the cost of the company's shares.

"This will include a proposal for issuing free bonus shares to all categories of shareholders excluding the promoter group, thereby protecting investors from even short-term losses on their shareholdings," it said.

Reliance Power's shares, which listed on the stock exchange on Feb. 11, had fallen by a quarter but recovered to close 15 percent below the IPO price of 450 rupees a share on Friday, helped by a three-day market rally which saw the benchmark index climb 9 percent.

The slump in Reliance Power, a unit of the Anil Dhirubhai Ambani group, infuriated investors, many of whom complained they were lured to invest in the company because of promises from the firm, which has no operating power plants and is unlikely to report strong profits for five years.

Reliance's supporters say the Ambani family has a strong track record of executing projects on schedule and delivering strong returns to investors, attracting millions of investors to bid for its shares offered in India's biggest IPO ever.

The company said its shares were hit by weak market sentiment and blamed rivals, who were not identified, for hammering shares of companies in the Anil Dhirubhai Ambani Group.

It also reminded investors that there were risks attached to equity investments.

"Equity shares, by their very nature, are risk-bearing instruments and there is no obligation on behalf of any issuer to insure investors against possible losses," it said.

However, the company's board would consider a bonus issue and other steps as the group had a "fundamental and over-riding philosophy of creating value for genuine long term investors".

The fall in Reliance Power's shares followed market turbulence that knocked out a few IPOs, including the $1.6 billion issue from Emaar MGF Land, the Indian unit of Dubai's Emaar Properties.

Reliance Communications, another Anil Ambani firm, is planning an IPO for its telecom towers unit, Reliance Infratel Ltd, which media reports and bankers say aims to raise $1-1.5 billion.

Founded by Dhirubhai Ambani, the Reliance companies were divided between the late Ambani's sons in 2005. Anil has interests in telecoms, financials, media and power while elder brother Mukesh controls India's top listed firm, oil and petrochemicals giant Reliance Industries Ltd.

By Prashant Mehra

Source : http://in.reuters.com/

R-Power gains over 5 per cent; outperforms Sensex

Reliance Power, the Anil Ambani group's latest entry to bourses, today clocked a 5.3 per cent rise in its share price, snapping a three-day losing streak and outperforming the market benchmark Sensex in the process.

In a bullish market where the Sensex rose by 817 points or 4.82 per cent, shares of Reliance Power on Thursday closed for the first time in a positive territory. After hitting an intra-day peak of Rs 374.80, the stock settled 5.31 per cent up at Rs 370.05 at the BSE.

The stock had debuted on the bourses on Monday when it settled nearly 17 per cent below the issue price of Rs 450. The stock fell further by about five per cent on Tuesday and by about one per cent again on Thursday.

However, despite a recovery seen on the counter, today's closing price was still about Rs 80 below the price at which investors were alloted the shares in the country's biggest- ever IPO last month.

The company had scaled a lifetime peak of Rs 599.90 on February 11, while it hit a low of Rs 332.50 on Wednesday at the BSE.

Buying was seen across the Reliance pack of shares in today's trade. Among Anil Ambani group stocks, Reliance Communications rose 9.26 per cent, Reliance Energy gained 9.63 per cent, and Reliance Capital appreciated by 9.41 per cent, Reliance Natural Resources Ltd soared 12.91 per cent, while Adlabs Films saw its share price adding 8.58 per cent.

In elder brother Mukesh Ambani-led group, Reliance Industries rose 5.35 per cent, Reliance Petroleum gained 13.56 per cent, whereas Reliance Industrial Infrastructure Ltd slipped 1.30 per cent.

Source : http://www.hindustantimes.com/

Reliance Power Limited : Business Profile

Reliance Power Limited is part of the Reliance Anil Dhirubhai Ambani Group and is established to develop, construct and operate power projects domestically and internationally. The Company on its own and through subsidiaries is currently developing 13 medium and large sized power projects with a combined planned installed capacity of 28,200 MW, one of the largest portfolios of power generation assets under development in India. Our 13 power projects are planned to be diverse in geographic location, fuel type, fuel source and off-take, and each project is planned to be strategically located near an available fuel supply or load center. The identified project sites are located in western India (12,220 MW), northern India (9,080 MW) and northeastern India (2,900 MW) and southern India (4,000 MW). They include six coal-fired projects (14,620 MW) to be fueled by reserves from captive mines and supplies from India and abroad, two gas-fired projects (10,280 MW) to be fueled primarily by reserves from the Krishna Godavari Basin (the "KG Basin") off the east coast of India, and four hydroelectric projects (3,300 MW), three of them in Arunachal Pradesh and one in Uttarakhand. Reliance Power has acquired the two ultra mega power projects of 4,000 MW each at Sasan in Madhya Pradesh and Krishnapatnam in Andhra Pradesh. The 7,480 MW project to be located at Dadri in Uttar Pradesh is expected to be the largest gas-fired power project at a single location in the world. We intend to sell the power generated by these projects under a combination of long-term and short-term PPAs to state-owned and private distribution companies and industrial consumers.

Source : www.reliancepower.co.in

Reliance Power Drops on Bombay Stock Exchange Debut

Reliance Power Ltd., the company that raised $3 billion in India's biggest initial public offering, fell as much as 21 percent on debut as a global equities sell-off dried up appetite for new shares.

The unit of Reliance Energy Ltd., controlled by billionaire Anil Ambani, fell to 355.05 rupees on the Bombay Stock Exchange, from the 450 rupees at which the stock was sold in the IPO last month. The stock closed 17 percent lower at 372.5 rupees.

Indian stocks have tumbled 5.8 percent so far this month, amid a global rout, prompting companies to scrap $1.8 billion of share sales. Investors sought $189 billion worth of Reliance Power shares, betting it will benefit from India's $200 billion plan to provide electricity to a growing industry and more than 400 million people without access to power.

``There seems to be some kind of a panic out there, it's got to do with the broader market,'' said Viswanathan Vasudevan, who manages about $300 million at Aquarius Investment Advisors Pte in Singapore. ``Reliance's projects have always been ambitious but they have the track record of delivering.''

Investors cast doubt on the scale of the nation's energy generation plans after the government said last week it expects growth to slow for the first time in three years and announced an unexpected rise in inflation. That may discourage the central bank from cutting interest rates and companies from making the investments needed for growth.

`Just Too Rich'

``If you look at Reliance Power, I would say valuations were just too rich,'' said P. Phani Sekhar, who manages $25 million at Angel Broking Ltd. ``The valuations have gone beyond themselves. This should have been the valuation five years later.''

Indian utilities on average generate 14 percent return on equity, according to Sekhar. Transmission losses are high and regulators are reluctant to allow higher tariffs, he said.

``Even if investors discounted possible delays in executing projects, they cannot make enough to justify valuations through generation, their core business,'' Sekhar said.

Morgan Stanley downgraded its rating on Reliance Energy last month, saying its generation unit was overvalued. The bank valued Reliance Power at $11.85 billion, compared with the parent's valuation of $23 billion to $25 billion for the unit, Mumbai-based analysts Parag Gupta and Saumya Srivastav said Jan. 14.

Reliance Power sold 260 million shares at 405 rupees to 450 rupees apiece. Ambani plans to set up 13 plants with 28,200 megawatts of generating capacity over five years, a third of India's planned new projects. Ambani, who will use the money to fund his $28 billion plan, became the second-richest man in India after his Reliance Energy, India's second-biggest utility by market value, quadrupled in value last year.

Recession Concern

Reliance Power, 50 percent owned by Reliance Energy, received orders for 16.6 billion shares, the company said. ABN Amro Rothschild, Deutsche Bank AG, Enam Securities Pvt., ICICI Securities Ltd., JM Financial Consultants Pvt., JPMorgan Chase & Co., Kotak Mahindra Capital Co. and UBS AG arranged the Reliance Power IPO.

Stocks have tumbled globally on concern that the collapse of the U.S. subprime mortgage market will push the world's largest economy into a recession and slow global growth. Emaar MGF Land Ltd. and Wockhardt Hospitals Ltd. scrapped their initial share-sale offers in India last week after failing to sell enough shares.

India's key Sensitive Index, or Sensex, has dropped 18 percent this year, compared with a 47 percent increase last year. It fell 4.8 percent to 16,630.91 today.

Inflation, Growth

Reliance Energy fell to a 17-year low on Jan. 22 on concern the power unit would list below its IPO price because of slumping markets. Reliance Energy shares today fell 19 percent to 1,582.3, the biggest drop since May 2004.

India's inflation accelerated to 4.11 percent in the week ended Jan. 26, the highest in more than five months, the government said on Feb. 8. The central bank has kept borrowing costs at a five-year high to curb inflation, while the government has held off from raising fuel prices since June 2006.

India's economic growth may slow to 8.7 percent this year from 9.6 percent in the previous financial year, the government said on Feb. 7.

The nation plans to add 78,577 megawatts of capacity in the five years to March 2012 to help bridge a 13 percent shortfall in peak demand.

Anil Ambani has invested in a range of businesses since breaking with brother Mukesh in 2005 and the splitting of the Reliance Group of companies founded by father Dhirubhai Ambani, following an agreement mediated by their mother Kokilaben.

The younger brother's wealth more than tripled last year to $45 billion, according to Forbes magazine, putting him behind Mukesh, chairman of Reliance Industries Ltd. The Reliance Industries chairman's wealth was estimated at $49 billion in the Forbes November 2007 survey.

By Archana Chaudhary and Manash Goswami
Source : www.bloomberg.com

Anxious wait for Reliance Power listing

As found at : www.thehindubusinessline.com

Mumbai, Feb. 8 Investor anxiety is mounting as the Monday listing of Reliance Power nears.

The company’s mega IPO concluded last month, raising Rs 11,500 crore.

Analysts and investors are wondering whether Reliance Power will list below the issue price in the current bear market, or above the issue price despite the bear market.

The issue price was Rs 450 a share; retail investors received allotment at Rs 430 a share.

The concern extends to whether the Reliance Power price will sustain, even if the company lists at a premium to the issue price.

“Past investor behaviour suggests that a premium will lead to immediate selling and booking of profits,” said an official with a broking firm.

“It may also come under selling pressure as those who have taken loans from banks will try to book profits to pay them off.”

The recent withdrawal of two IPOs does not set a very good tone for markets next week either, he said.

Source : www.thehindubusinessline.com

Reliance Power Ltd. official web site

Official Website of Reliance Power Ltd is under contruction.

You can check it out Click here : Reliance Power Ltd Official Web Site

Reliance Power listing on Feb 11

Reliance Power shares will make their debut in the secondary market on February 11 with the shares being listed on the Bombay Stock Exchange and National Stock Exchange.

The company, which attracted over 5 million bids from all categories of domestic and international investors with aggregate commitment of over Rs 750,000 crore, will have a shareholder base of 4.2 million.

Source : www.business-standard.com

Rel Power has largest base of shareholders

Press Trust Of India / New Delhi February 03, 2008

Anil Ambani group’s Reliance Power has become the country’s biggest company in terms of the number of shareholders following the allotment of shares in its recently completed Rs 11,560 crore initial public offering.

Reliance Power, whose IPO ended on January 18 with a demand worth over Rs 7,50,000 crore and over-subscription of 73 times, has close to 42 lakh shareholders, the company said today after the allotment of shares.

This shareholder base is bigger than any other company currently listed on the Indian stock exchanges, according to the shareholding data filed with the bourses.

Reliance Power has taken over another group company, Reliance Natural Resources Ltd (RNRL) in terms of number of shareholders.

According to the latest information available with stock exchanges, RNRL had close to 22.3 lakh shareholders at the end of December 2007 quarter, followed by Mukesh Ambani-led Reliance Industries with close to 20.6 lakh shareholders.

Interestingly, seven top companies in terms of the number of shareholders belong to either of the groups led by two Ambani brothers.

While the top two companies — Reliance Power and RNRL — belong to Anil Ambani group, the third largest, RIL, and fifth largest, Reliance Petroleum (RPL) belong to the Mukesh Ambani group.

Anil Ambani group’s Reliance Communications is the fourth largest with a shareholder base of about 19.8 lakh. RPL had close to 16.9 lakh shareholders as on December 31, 2007.

Besides, Anil Ambani group’s Reliance Energy and Reliance Capital are sixth and seventh largest with 15.4 lakh and 12.5 lakh shareholders respectively.

Reliance Power’s total shareholder base of about 42 lakh includes a large proportion of 41.7 lakh from the retail category.

The seven Reliance companies are followed by government- run PowerGrid (PGCIL) at the eighth position (9.5 lakh), Adani group’s Mundra Port & SEZ at ninth (8.1 lakh) and Tata group’s TCS (7.35 lakh) at the tenth position.

Other companies in the top 20 include PSU power major NTPC (7.1 lakh shareholders), ICICI Bank (6.8 lakh), IFCI (6.4 lakh), Tata Steel (6 lakh), MRPL (5.5 lakh), Infosys (5.4 lakh), SBI (5.4 lakh), JSW Steel (5.2 lakh), Larsen and Toubro (4.95 lakh), Ispat Industries (4.89 lakh) and Tata Teleservices (4.6 lakh).

Reliance Power today said it has allotted shares to 41.7 lakh retail investors, while 12,000 non-institutional investors have also been given shares in the IPO. Besides, it has allotted shares to 446 domestic and international QIBs.

About 4.5 lakh retail investors could not get any shares in the IPO as their bids were for less than 225 shares each — the benchmark approved for the allocation purpose after the book building process

Source : www.business-standard.com

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Reliance Power has 42 lakh shareholders

Mumbai, Feb 1 Nearly 4.5 lakh retail investors, who applied for less than 225 shares of Reliance Power each, have not been made any allotments by the company.

This means that RPL has issued shares to only those applicants who committed to invest at least Rs 96,750 in its IPO.

The company’s IPO, which created several records on many counts and also created a liquidity crisis, said it had today commenced making its refunds of more than Rs 1 lakh crore.

This was in fact partly responsible for the reversal of the downward trend in the market earlier in the day.

The company has allotted 15 shares each to 41.7 lakh retail investors who applied for more than 225 shares each.

The company said it now had 42 lakh shareholders. There had been 50 lakh bids for the IPO.

Reliance Power had fixed the issue price at Rs 450, the upper end of its price band, after receiving subscriptions for 73 times the number of shares on offer. Retail investors were given shares at a discount of Rs 20, at Rs 430 per share.

The issue had attracted over 50 lakh bids from all categories of investors.

The refunds to QIBs and Non Institutional Investors have been effected today through electronic credits, said a statement from the company.

An aggregate of 446 domestic and international QIBs will receive only 1.2 per cent of their applied quantity of shares.

About 12,000 HNIs will receive only 0.6 per cent of their applied quantity of shares.

The QIB portion was subscribed 82.5 times; and high net worth individual category 159.6 times.

Thirty per cent of the net issue was reserved for retail investors whose subscription was 13.6 times the portion reserved for them.

Refund in 10 days


“The allotment and refund exercise post closure of the largest IPO ever has been carried out in a record time of 10 working days,” the company said in a statement.

The largest Indian public issue opened for subscription on January 15The IPO offered 26 crore shares of face value Rs 10 each in the price band of Rs 405 to Rs 450. It raised Rs. 11,500 crore.

Investors had made aggregate commitments of more than Rs 7,50,000 crore.

The stock market’s key indices the Sensex and the Nifty gained 3.3 per cent and 3.5 per cent respectively.

The IT sector was the largest gainer in today’s rally, rising by 5.77 per cent.

Source : http://www.thehindubusinessline.com





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Reliance Power Listing to Charge Up Indian IPOs

While Reliance Power may not be a stock for short-term investors to consider, the company is poised to get the Indian IPO market off to a good start this year। The greenfield power producer is seeking to raise between Rs105.3 billion and Rs117 billion ($2.7 billion to $3 billion), which will make it the largest Indian IPO evermdash;ahead of property developer DLF's $2.25 billion deal in June last year.


According to terms set last week, Reliance Power, which is a spin-off from Anil Ambani's Reliance Energy, will offer 260 million shares, or 11।5% of the company, at a price of Rs405 to Rs450 per share. The deal, which was delayed from the fourth quarter last year after investor complaints about Reliance Energy's transfer of certain high-value power projects to the listing vehicle, will be open for subscription from January 15 to 18. The Indian regulators dismissed the complaints late last year.


To help ensure a successful outcome of such a large sale, the promoters will buy 32 million of the shares, or 12.3% of the deal. Retail investors will be able to buy the shares at a Rs20 per share discount to the price paid by institutional investors and high-net-worth individuals. Depending on the final price, the discount will range from 4.4% to 4.9%. Unusually, retail investors also won't have to pay the entire subscription amount when submitting their orders, but can choose to divide the payments into two parts with the balance to be settled only after they know how many shares they will receive. This could make some investors more inclined to subscribe.
Aside from the large size, the Reliance Power IPO also stands out because the company has no plants in operation yet। The first project (Rosa Phase I) is due to start generating power and revenues in December 2009 with the other 12 plants scheduled for completion at a staggered pace until April 2016. As a result, the execution risk is much greater than for a typical IPO and it will require a big leap of faith from the investors to raise the cash that is needed to see these projects through.


Analysts note that the 600MW Rosa Phase I plant is the only one that will have even begun construction at the time of listing and, for some of the projects, the company doesn't yet hold the required land। In its preliminary listing prospectus, the company acknowledges that its power projects have a long gestation period and says it cannot assure that they will commence operations as expected.


"The completion targets for our projects are estimates and are subject to risks, including, among other things, contractor performance shortfalls, unforeseen engineering problems, force majeure events, unanticipated cost increases or changes in scope and delays in obtaining certain property rights, fuel supply and government approvals, any of which could give rise to delays, cost overruns or the termination of a project's development," it states.
"The IPO is quite dicey and people will be putting money into it solely on the reputation of the group," says one India-based analyst।


That reputation counts for a lot though and the deal is widely expected to be well received by the market amid a perception that Anil Ambani will make sure people won't lose money on this spin-off. They are also counting on the family's contacts and negotiation skills when it comes to removing various road blocks and making the necessary headway to realise the plans.
Meanwhile, the company and its eight bookrunning lead managers stress the fact that the power plant under development will make Reliance Power one of the largest power generators in India, and no other company will be able to show the same rapid growth rate in the coming seven to eight years। The assets will also be well-diversified, both geographically and in terms of fuel sources, and will be strategically located near its potential customers in the northern, western and north-eastern regions of the country as well as near its fuel sources or load centres.



And underlying it all is of course the expectation that the demand for power will continue to rise. According to projections made in India's National Electricity Plan, power demand will grow at an average annual rate of 9% between 2007 and 2012 and at 7% in the five years to 2017. The company says it plans to develop additional power projects on top of the 13 that are currently in the works to meet this demand increase and it has already submitted bids for four hydroelectric power projects in the state of Himachal Pradesh. It also intends to invest in overseas opportunities that are a strategic fit with its business.
The fact that the promoters have agreed to take up part of the deal also shows that they see value at the offered price।


Because Reliance Power doesn't have any operations at present, it is difficult to compare it to existing power generators, but the same India-based analyst argues that the valuation is rich versus both NTPC and Tata Power based on the market value per megawatt। Adding up the installed capacity of 28,200 megawatts at all the 13 plants that are planned to come on stream over the next seven to eight years, Reliance Power is offered at a price ranging from Rs32 million to Rs36 million per megawatt. This compares with less than Rs30 million for the other two, based on their current installed capacity, the analyst says, adding that Tata Power also has a lot of unlocked value in the form of coal mine stakes.


Investors will also have to take into account that Reliance Power will need to raise more cash over the next few years to cover the capital expenditures for the 13 plants, which are estimated at about $22।1 billion. The net proceeds from the IPO will go towards the funding of six of these projects, which will have a combined installed capacity of 9,860MW, including the 3,960MW coal-fired Sasan plant and the 4,000MW Shahapur plant, which will have one coal-fired unit and one combined cycle gas-fired unit.


The company will however need to raise a further $5.8 billion to fully fund these six plants. About 70%-80% of its total project costs are expected to be financed by debt.
Of the 228 million shares on offer to investors other than the promoters, 60% will go to qualified institutional investors, 10% to non-institutions such as high-net-worth individuals and the remaining 30% to retail investors।


The IPO comes as the Indian stock market continues to set new records, seemingly oblivious to the concerns about high oil prices, a weakening dollar and a potential slow-down in the US economy that have weighed on most other Asian markets in the first few days this year. However, the deal is likely to be closely watched given the pipeline of other Indian power companies that are also looking to go public over the next couple of months.
According to Bloomberg News, Jaiprakash Power Venture at the end of last week mandated six banks for an IPO that could raise more than $1 billion। Other companies waiting in the wings are JSW Energy and Sterlite Power.


"Spaced over a reasonable period of time there should be enough liquidity in the market to cater for the other IPOs that are coming to market, because power seems to be the hottest sector right nowmdash;provided that the issuers have the right business model and can show some profitability," the Indian analyst says. "And if Reliance Power can command these valuations for non-existing assets, then companies with existing assets should surely get a fair price."
Reliance Power will be brought to market by ABN AMRO, Deutsche Bank, Enam Financial Consultants, ICICI Securities, JM Financial, JPMorgan, Kotak Mahindra and UBS.



by Anette Jonsson , IPO Monitor , Business Week

Rel Power IPO subscribed 72.5 times

India's largest equity offer by Reliance Power mustered an equally large response with a subscription of 72.57 times over, as investors jostled to beat the Jan 18 deadline despite another major crash on the bourses. Against the 228 million shares on offer, the Anil Dhirubhai Ambani-led company received bids for a whopping 16,548,002,625 shares by 5 pm on the closing say, in what analysts said was a record in the history of Indian stock markets. A crash of 687.12 points, or 3.49 per cent, in a major stock index did not dampen sentiments for the issue, and analysts said people might have liquidated a part of their holdings in other stocks to subscribe to Reliance Power shares. This kind of response has not been seen in recent times. What is noteworthy is that the issue invited such unprecedented response despite a major crash in the Indian stock markets. The company had set the issue price in a band of Rs 405-450 with a Rs.20 rebate for retail investors for whom 30 percent of the 228 million shares on offer was set aside.

Source: Asian CERC Type: IPO Related