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.

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.

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 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





Click here to see the allotment details ..!!!!

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Reliance Power IPO Allotment Status

Click here to see the allotment details ..!!!!

Select Reliance Power Limited from the Drop Down List and Enter your application number. The list would be enabled once the registrar publishes the allotment details.

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