Reliance Power offers 3 free shares for every 5 held

February 24th, 2008 - 8:12 pm ICT by admin  

(Lead)

Mumbai, Feb 24 (IANS) Reliance Power Ltd (RPL), part of the Reliance Anil Dhirubhai Ambani Group (RADAG), Sunday announced it would give three bonus shares for every five held in an effort to reduce losses by shareholders after a dismal listing at Indian stock markets. The bonus shares are worth Rs.269 per share for retail shareholders and Rs.281 for institutional and other shareholders.

After the bonus issue, the effective cost of a share to retail investors has dropped to Rs.269 against the retail issue price of Rs.430. For institutional investors, the corresponding figure is Rs.281 against the issue price of Rs.450.

RPL, however, said no bonus shares were issued to the promoters of the company.

In a related development, Anil Dhirubhai Ambani, chairman of RADAG, announced a voluntary contribution of 2.6 percent of his shareholding in RPL to Reliance Energy Ltd (REL), to protect REL from any dilution of its 45 percent stake in RPL because of the bonus issue.

“I have been personally concerned by the notional losses arising to millions of long-term investors in Reliance Power as a result of dramatic adverse change in sentiment in global and domestic capital markets subsequent to the pricing of our IPO (initial public offering),” Ambani said in a statement.

“We have taken these one-time and unprecedented measures today in demonstration of our philosophy of endeavouring to protect and enhance value for all our long-term shareholders.”

The reduction of Ambani’s shareholding in RPL by 5 percent from 45 to 40 percent represents a contribution of nearly Rs.50 billion ($1.25 billion).

Shares of RPL closed at Rs.416.85 at the close of trading Friday on the Bombay Stock Exchange (BSE).

Despite drawing record subscriptions during its IPO, the first day of listing Feb 11 on BSE saw the Reliance scrip close at Rs.372, a huge decline over the issue price of Rs.450, after listing at Rs.547 at the bourse.

This had created huge resentment and disappointment among investors, who had overwhelmingly subscribed to the IPO, as many of them expected the scrip to debut higher at around Rs.750-850 a share.

The IPO had attracted more than five million bids from all categories of domestic and international investors with aggregate commitment of over Rs.7.5 trillion ($189 billion) against the issue size of Rs.115.60 billion ($2.91 billion).

RPL has over 4 million retail shareholders and nearly 500 overseas and domestic institutional investors.

The company is currently developing 12 power projects in the country with a total planned installed capacity of 28,000 MW. This is among the largest portfolios of power generation assets under development.

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