MUMBAI -
Riding a surge of investor interest, Reliance Power’s initial public offering attracted 800 billion rupees ($20.37 billion) worth of bids in the first two hours of trading.
The Mumbai-based company’s offering was oversubscribed 7.6 times on the Bombay Stock Exchange and National Stock Exchange, according to market sources. Billionaire Anil Ambani’s company had expected to raise $3 billion, making it the largest such issue ever on the Indian bourses.
The issue closes on Jan. 18. Reliance Power is selling 260 million shares at 405 rupees ($10.31) to 450 rupees ($11.46) each.
Parent company Reliance Energy (other-otc: RELFF - news - people ), India’s second-largest electricity business by market value, was down 0.3% on the Bombay Stock Exchange, at 2,468 rupees ($62.84) in midday trading. Last year, the stock quadrupled in value, making it the star performer on the benchmark 30-stock Sensex.
Reliance Power is the first Indian power company to tap the markets this year, at a time when the sector is seeing a spurt in investments. The government, which has a goal of power for all by 2012, estimates it will need an investment of $500 billion over the same period for infrastructure—roads, ports, airports and power generation. India’s electricity shortfall amounts to around 13% during peak hours.
Ratings agency CRISIL, the Indian arm of Standard and Poor’s assigned the Reliance Power IPO an above-average rating, saying strong demand for power would benefit early movers like Reliance Power. But Morgan Stanley downgraded Reliance Energy to “underweight”: “The key reason for the downgrade is the valuation of Reliance Power, which we value at $11.85 billion, while Reliance Energy stock seems to be discounting the value of Reliance Power at $23-25 billion (on the IPO price band),” Morgan said in a note to clients Monday. The primary risks for Reliance Power, it observed, are “execution delays and continued ambiguity on gas supplies necessary for firing over 10,000 mega watts of capacity.”
Indian companies are expected to raise $15.8 billion from 35 issues in initial public offerings this year, according to Thomson Financial. The figure is almost double the IPO proceeds raised in India in 2007--$8.3 billion from 91 issues. Real estate firm DLF set a record last year when it raised $2.7 billion in an IPO. India is ninth most active global IPO issuer, with an overall market share of 2.7% in 2007.
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Companies: RELFF
Reliance Power's IPO was subscribed 100% within one minute of its opening, and by now has been oversubscribed by 73 times the number of shares available. That means that $193 billion is sitting in banks and not available for re-investment into the markets.
The IPO has added to the liquidity crunch in the Indian market as FIIs panicked and pulled their money out, only to meet potential redemption issues elsewhere due to the subprime crisis.
Under Indian rules, IPO allocations are made on a pro-rata basis, which means the bigger the allocation an investor -- individual or institutional (both domestic or foreign) -- desires, the larger the amount of shares the investor must request.
Accompanying the application, which specifies how many shares the investor wants to buy, is a check for a deposit of anywhere from 15%-25% of the total amount bid. That money is banked by the company coming public until the investment bankers bringing the company public decide on the allocations among the investors.
In Reliance Power's case, the 73 times oversubscription has led to a whopping $190 billion sitting in Reliance banks, and the company wants to fast track that money back to investors, as it is their group companies that have been among the hardest hit in the Sensex plunge.
Reliance has applied to SEBI and RBI to be allowed to return the money, less the payments for shares allocated to investors by Feb. 1, 2008, which would then be a trigger behind bringing liquidity gushing back to Indian markets
MUMBAI -
Riding a surge of investor interest, Reliance Power’s initial public offering attracted 800 billion rupees ($20.37 billion) worth of bids in the first two hours of trading.
The Mumbai-based company’s offering was oversubscribed 7.6 times on the Bombay Stock Exchange and National Stock Exchange, according to market sources. Billionaire Anil Ambani’s company had expected to raise $3 billion, making it the largest such issue ever on the Indian bourses.
The issue closes on Jan. 18. Reliance Power is selling 260 million shares at 405 rupees ($10.31) to 450 rupees ($11.46) each.
New Delhi: The fall in the stock markets on Wednesday has sparked off speculation in the likely listing price of Reliance Power in the grey market.
While on Tuesday the grey market was indicating a premium of Rs 450 on listing at Rs 900, the stock exchange crash has seen it drop by Rs 300 to about Rs 750.
The Anil Dhirubhai Ambani Group-promoted Reliance Power Ltd’s Rs 11,700 crore IPO has been subscribed over 11 times so far. It was subscribed over 10 times on Day I itself with bids amounting to Rs 1 lakh 9 thousand crore.
That means it might list at Rs 750 rather than the earlier suggested price of Rs 900. According to market analysts the premiums might rise if indices bounce back.
Most of the money has come in from institutions or the Qualified Institutional Buyers (QIB) portion, which has been subscribed 16.2 times.
The retail portion has been subscribed only 0.8 times. Most of the money from retail investors is expected to come in on the last day of the issue, which is January 18.
Reliance Power is issuing 260 million shares at a price band of Rs 405 to Rs 450 each.
The steep fall in the stock markets is closely linked to the grey market premium falling but if the markets bounce back then the premium could once again rise.
The markets crashing has meant that investors who were earlier looking at taking loans to finance their funding of Reliance Power are now running scared. They want to take loans of a lower amount or do not want to take the risk at all.
This in turn could mean that the amount of money which investors place on the Reliance Power IPO, the largest in India, may shrink. But there is a bright side, too, as less applications mean investors who have already placed their bids have a higher chance of getting their full share allotments.
Network 18 has done an analysis of the likely returns on different price points of listing.
• If the issue is subscribed 100 times and the share lists at Rs 700 , then the return will be 14.8 per cent . But the returns goes up if the share lists at Rs 750 or even Rs 800.
• On the other hand if the subscription levels go up to say 200 times then at a listing of Rs 700 , the returns will go down to just four per cent.
This IPO is the biggest public offers stacking shares of 26-crore equity IPO with the upper price band of Rs 405-450 per share of face value Rs 10 per share. The offer closes on January 18.
With this largest IPO, Anil Ambani, the Chairperson of Anil Dhirubhai Ambani Group, ADAG firm is expecting to collect Rs.10,530 -11,700 with the lower and upper price band, if all the IPO would be grasped. This would carry the ADAG chairman on the second seat of the richest Indian followed by his own big brother Mukesh Ambani, who is at present on the top. Though Anil Ambani is still on the second position, yet RPL (Reliance Power Ltd.) can establish him on the top seat if the share of RPL booms in stock market, as bankers believes.
Out of total released shares staking 260-million will be offered to the public on a proportional basis to qualified institutional buyers (QIB) by at least 60 per cent of the net issue, while non-institutional bidders will get 10 percent and remaining 30 percent of the share will be issued to retail investors.
RPL would own 50 percent of the share while rest 50 percent will be diversified between the promoters of the ADAG, institutional buyers, non-institutional bidders and public.
Through this IPO, RPL will reduce the stack of Reliance Energy Limited up to 45 percent as RPL is the subsidiary of REL that has already surging the stock market with its outer performing performance. The released IPO would be the 10.1 percent asset of the RPL's total capital.
Announcing to release this IPO, Anil Ambani said to the media that the collected amount would be invested in RPLs six power projects across the country to fulfill the requirement of power near coming future. Each project varies on gas, coal and hydropower whose completion dates are scheduled from December 2009 to March 2014. All these projects will function individually under one roof RPL.
Riding a surge of investor interest, Reliance Power’s initial public offering attracted 800 billion rupees ($20.37 billion) worth of bids in the first two hours of trading.
The Mumbai-based company’s offering was oversubscribed 7.6 times on the Bombay Stock Exchange and National Stock Exchange, according to market sources. Billionaire Anil Ambani’s company had expected to raise $3 billion, making it the largest such issue ever on the Indian bourses.
The issue closes on Jan. 18. Reliance Power is selling 260 million shares at 405 rupees ($10.31) to 450 rupees ($11.46) each.
Parent company Reliance Energy (other-otc: RELFF - news - people ), India’s second-largest electricity business by market value, was down 0.3% on the Bombay Stock Exchange, at 2,468 rupees ($62.84) in midday trading. Last year, the stock quadrupled in value, making it the star performer on the benchmark 30-stock Sensex.
Reliance Power is the first Indian power company to tap the markets this year, at a time when the sector is seeing a spurt in investments. The government, which has a goal of power for all by 2012, estimates it will need an investment of $500 billion over the same period for infrastructure—roads, ports, airports and power generation. India’s electricity shortfall amounts to around 13% during peak hours.
Ratings agency CRISIL, the Indian arm of Standard and Poor’s assigned the Reliance Power IPO an above-average rating, saying strong demand for power would benefit early movers like Reliance Power. But Morgan Stanley downgraded Reliance Energy to “underweight”: “The key reason for the downgrade is the valuation of Reliance Power, which we value at $11.85 billion, while Reliance Energy stock seems to be discounting the value of Reliance Power at $23-25 billion (on the IPO price band),” Morgan said in a note to clients Monday. The primary risks for Reliance Power, it observed, are “execution delays and continued ambiguity on gas supplies necessary for firing over 10,000 mega watts of capacity.”
Indian companies are expected to raise $15.8 billion from 35 issues in initial public offerings this year, according to Thomson Financial. The figure is almost double the IPO proceeds raised in India in 2007--$8.3 billion from 91 issues. Real estate firm DLF set a record last year when it raised $2.7 billion in an IPO. India is ninth most active global IPO issuer, with an overall market share of 2.7% in 2007.
Second-Rate Super Tuesday On Wall Street
Broker Action: Yahoo!
Your Rating Overall Rating
Reader Comments
Reliance Power Sets IPO For Early February
Power Grid Surges On Debut
Reliance Energy Plans To Raise $2B From Those It Relies On
Companies: RELFF
Reliance Power's IPO was subscribed 100% within one minute of its opening, and by now has been oversubscribed by 73 times the number of shares available. That means that $193 billion is sitting in banks and not available for re-investment into the markets.
The IPO has added to the liquidity crunch in the Indian market as FIIs panicked and pulled their money out, only to meet potential redemption issues elsewhere due to the subprime crisis.
Under Indian rules, IPO allocations are made on a pro-rata basis, which means the bigger the allocation an investor -- individual or institutional (both domestic or foreign) -- desires, the larger the amount of shares the investor must request.
Accompanying the application, which specifies how many shares the investor wants to buy, is a check for a deposit of anywhere from 15%-25% of the total amount bid. That money is banked by the company coming public until the investment bankers bringing the company public decide on the allocations among the investors.
In Reliance Power's case, the 73 times oversubscription has led to a whopping $190 billion sitting in Reliance banks, and the company wants to fast track that money back to investors, as it is their group companies that have been among the hardest hit in the Sensex plunge.
Reliance has applied to SEBI and RBI to be allowed to return the money, less the payments for shares allocated to investors by Feb. 1, 2008, which would then be a trigger behind bringing liquidity gushing back to Indian markets
MUMBAI -
Riding a surge of investor interest, Reliance Power’s initial public offering attracted 800 billion rupees ($20.37 billion) worth of bids in the first two hours of trading.
The Mumbai-based company’s offering was oversubscribed 7.6 times on the Bombay Stock Exchange and National Stock Exchange, according to market sources. Billionaire Anil Ambani’s company had expected to raise $3 billion, making it the largest such issue ever on the Indian bourses.
The issue closes on Jan. 18. Reliance Power is selling 260 million shares at 405 rupees ($10.31) to 450 rupees ($11.46) each.
New Delhi: The fall in the stock markets on Wednesday has sparked off speculation in the likely listing price of Reliance Power in the grey market.
While on Tuesday the grey market was indicating a premium of Rs 450 on listing at Rs 900, the stock exchange crash has seen it drop by Rs 300 to about Rs 750.
The Anil Dhirubhai Ambani Group-promoted Reliance Power Ltd’s Rs 11,700 crore IPO has been subscribed over 11 times so far. It was subscribed over 10 times on Day I itself with bids amounting to Rs 1 lakh 9 thousand crore.
That means it might list at Rs 750 rather than the earlier suggested price of Rs 900. According to market analysts the premiums might rise if indices bounce back.
Most of the money has come in from institutions or the Qualified Institutional Buyers (QIB) portion, which has been subscribed 16.2 times.
The retail portion has been subscribed only 0.8 times. Most of the money from retail investors is expected to come in on the last day of the issue, which is January 18.
Reliance Power is issuing 260 million shares at a price band of Rs 405 to Rs 450 each.
The steep fall in the stock markets is closely linked to the grey market premium falling but if the markets bounce back then the premium could once again rise.
The markets crashing has meant that investors who were earlier looking at taking loans to finance their funding of Reliance Power are now running scared. They want to take loans of a lower amount or do not want to take the risk at all.
This in turn could mean that the amount of money which investors place on the Reliance Power IPO, the largest in India, may shrink. But there is a bright side, too, as less applications mean investors who have already placed their bids have a higher chance of getting their full share allotments.
Network 18 has done an analysis of the likely returns on different price points of listing.
• If the issue is subscribed 100 times and the share lists at Rs 700 , then the return will be 14.8 per cent . But the returns goes up if the share lists at Rs 750 or even Rs 800.
• On the other hand if the subscription levels go up to say 200 times then at a listing of Rs 700 , the returns will go down to just four per cent.
This IPO is the biggest public offers stacking shares of 26-crore equity IPO with the upper price band of Rs 405-450 per share of face value Rs 10 per share. The offer closes on January 18.
With this largest IPO, Anil Ambani, the Chairperson of Anil Dhirubhai Ambani Group, ADAG firm is expecting to collect Rs.10,530 -11,700 with the lower and upper price band, if all the IPO would be grasped. This would carry the ADAG chairman on the second seat of the richest Indian followed by his own big brother Mukesh Ambani, who is at present on the top. Though Anil Ambani is still on the second position, yet RPL (Reliance Power Ltd.) can establish him on the top seat if the share of RPL booms in stock market, as bankers believes.
Out of total released shares staking 260-million will be offered to the public on a proportional basis to qualified institutional buyers (QIB) by at least 60 per cent of the net issue, while non-institutional bidders will get 10 percent and remaining 30 percent of the share will be issued to retail investors.
RPL would own 50 percent of the share while rest 50 percent will be diversified between the promoters of the ADAG, institutional buyers, non-institutional bidders and public.
Through this IPO, RPL will reduce the stack of Reliance Energy Limited up to 45 percent as RPL is the subsidiary of REL that has already surging the stock market with its outer performing performance. The released IPO would be the 10.1 percent asset of the RPL's total capital.
Announcing to release this IPO, Anil Ambani said to the media that the collected amount would be invested in RPLs six power projects across the country to fulfill the requirement of power near coming future. Each project varies on gas, coal and hydropower whose completion dates are scheduled from December 2009 to March 2014. All these projects will function individually under one roof RPL.