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.
Sunday, February 24, 2008
3:5 bonus from Reliance Power; effective price will be Rs 269
Sunday, February 17, 2008
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/
