Reliance Power gallops above issue price

Reliance Power gallops above issue price

Reliance Power surged 8.45% to Rs 452.10 at 14:411 IST on BSE, above its issue price of Rs 450 offered during recently concluded public issue

This is the first the stock is trading at premium as compared to issue price of Rs 450 per share. On its listing on 11 February 2008, the stock debuted on 11 February at Rs 547.80 and hit a high of Rs 599.90. However barely within minute of its debut, it started declining and slipped to discount. The stock surge today after its board-approved issue of three bonus shares for every five held, to compensate for the slump in the stock price post listing.

Meanwhile, the BSE Sensex was up 221.55 points or 1.28% to 17,570.55 in volatile trade.

The Reliance Power counter saw high volumes of 1.46 crore shares on BSE. It was the top traded counter on BSE with turnover of Rs 618.84 crore

The stock hit a high of Rs 455.10 and low of Rs 421.40 so far during the day. The stock had hit a 52-week high of Rs 599.90 on 11 February 2008 and a 52-week low of Rs 332.50 on 13 February 2008.

The current equity share capital of Reliance Power is Rs 2259.82 crore, which will increase to Rs 2397 crore after this bonus issue. Face value per share is Rs 10.

Reliance Power’s board of directors in a meeting held on Sunday, 24 February 2008, informed that bonus shares will be issued to all shareholders, excluding the promoter group comprising of Reliance Energy and the ADA Group.

In a related development, Anil Ambani, Chairman, Reliance ADA Group, simultaneously announced a voluntary contribution of 2.6% of his shareholding in Reliance Power to Reliance Energy, to prevent Reliance Energy from any dilution of its existing 45% stake in Reliance Power, as a result of the bonus issue.

Following bonus issue and personal stake transfer by Anil Ambani, the cost of acquisition of Reliance Power stock will come down by 40% for retail shareholders to Rs 269 per share from issue price of Rs 430 per share. In the same way, for other investors the acquisition cost will be reduced by 37% to Rs 281, from issue price of Rs 450.

Following this bonus issue, Anil Ambani’s stake will come down to 40% from the present 45%. Reliance Energy’s shareholding remains unchanged at 45% while public shareholding will increase by 5% to 15%.

Reliance Power’s move to issue bonus shares came following the dismal debut of the shares on the bourses on 11 February 2008 and the stock consistently trading at a discount to the IPO price of Rs 450. Reliance Power had settled at Rs 372.50 on BSE, a discount of 17.22% over IPO price of Rs 450, on its day of debut on 11 February 2008. Retail investors were offered shares at Rs 430 i.e. at a discount of Rs 20 per share.

Reliance Power, which came out with the country’s largest initial public offer had got overwhelming response from investors. The issue had got an aggregate commitment of over Rs 7.50 lakh crore, as against the issue size of Rs 11,560 crore.

Reliance Power is developing 13 power generation projects with a capacity of 28,200 megawatt (MW).