Reliance Power IPO...gone in 60 seconds

As expected, investors of all hues and categories scrambled to submit bids for the Initial Public Offering (IPO) of Reliance Power, part of the Anil Dhirubhai Ambani Group (ADAG), as the US$3bn issue opened on Jan. 15. The issue was oversubscribed within seconds of opening on Jan. 15. According to the National Stock Exchange (NSE), the biggest ever public issue to hit the Indian markets was subscribed by 73 times as at 6 p.m. on Friday, with the QIBs and HNIs accounting for the big chunk of the bids. The ADAG company, promoted by Reliance Energy and Anil Dhirubhai Ambani, received bids for 16.55bn shares as against the issue size of 228mn shares. Reliance Power's promoters Anil Dhirubhai Ambani and Reliance Energy brought in their contribution of Rs14.4bn at Rs450 per share. The subscription price for these shares was determined at the upper end of the price band of Rs405-450 per share.

The Reliance Power IPO is expected to raise Rs107-117bn. The total issue size is of 260mn shares, including the promoters' contribution of 32mn shares. The issue has being rated 4/5 by rating agencies CRISIL and ICRA, indicating above average fundamentals. Retail investors were offered a discount of Rs20 per share, which implies their net cost of subscription will be Rs430 per share, if they choose to bid at Rs450 per share. They also had the option of making part payment, wherein they had to put in only Rs115 per share upon application. The balance will be called upon, post the allotment of partly paid shares.

With a combined planned installed capacity of 28,200 MW, Reliance Power has one of the largest portfolios of power generation assets under development in India. The issue proceeds are proposed to be utilised for funding subsidiaries to part-finance the construction and development costs of the various projects under development and for general corporate purposes. Meanwhile, the Securities Appellate Tribunal (SAT) adjourned its hearing till Jan. 21, on complaints against the Reliance Power IPO. Last week, the Supreme Court had said the IPO will go ahead even if there is any case against it.