Anil Ambani-owned Reliance Power Ltd said on Sunday that it has decided to offer bonus shares to all its shareholders, in a bid to offset the losses they suffered after the company's stock made a poor debut on the market last week.
No bonus shares will, however, be issued to promoters of the company, an official statement said. It didn't give the ratio in which bonus shares will be issued, saying a decision on that is expected at a board meeting on February 24. People tracking the development said Reliance Power might go for one bonus share against 3 or 4 existing shares.
Depending on whether the ratio is pegged at 1:3 or 1:4, the effective cost of each share to the retail investor will drop to Rs 322 or Rs 344 respectively as compared to the issue price of Rs 430 per share. For institutional investors, the corresponding figure ranges from Rs 337 to Rs 360 as against the issue price of Rs 450.
Shares of Reliance Power closed at Rs. 384 in Friday's trading. The stock has lost 11 percent since it was listed on stock exchanges on February 11.
The poor showing of Reliance Power has been largely attributed to a broader bearish trend in the stock market, which has been hit by growing uncertainties over an impending recession in the US and a worsening turmoil in the global financial market. The benchmark index of the Bombay Stock Exchange, the Sensex, has lost 13 percent since January 15, the day the public issue was opened for subscription.
Reliance had floated 22.8 crore shares through its IPO _ the country's largest ever. The decision announced Friday will amount to a fresh issue of anything between 5.7 crore shares to 7.6 crore shares depending on how the bonus is pegged. It will amount to a dilution of up to 3 percent stake currently held by the promoters.
The promoters now hold 90 percent stake in the company.