Reliance Power offers free shares to offset losses

February 24th, 2008 - 8:13 pm ICT by admin  

Mumbai, Feb 24 (IANS) In a bid to reduce losses to shareholders after a dismal listing at India’s stock exchanges, Anil Ambani-promoted Reliance Power Ltd Sunday announced issue of bonus shares in the ratio 3:5, which means that the company will issue three free shares for every five shares held. However, RPL said no bonus shares were issued to the promoters of the company.

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

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 it initial public offering (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).

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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