WITH BENCHMARK equity indices scaling new peaks, multi-billion offerings are set to rain on the bourses this winter. Three mega issues, amounting to Rs 30,000 crore, are likely to hit the equity markets by end-2007.
Reliance Power, a subsidiary of Anil Ambani-led Reliance Energy, is planning to raise about Rs 14,000 crore ($3.5 billion) through an initial public offer of shares, the biggest ever, dwarfing the Rs 10,500-crore IPO of DLF, while realty firm Emaar MGF is likely to hit the bourses in November with a Rs 6,000-crore IPO.
On Sunday, the Reliance Energy board approved that Reliance Power will undertake an initial public offer of equity shares, a company spokesperson said, adding the company would shortly approach market regulator Securities Exchange Board of India (SEBI) with its draft prospectus for the IPO.
Together, the issues are expected to garner about Rs 20,000 crore, making it the biggest fund mop up in a single month, ahead of the combined Rs 19,250 crore raised by the DLF IPO and the ICICI Bank follow-on offer in June.
The State Bank of India is also planning to raise Rs 10,000 crore through an equity offering by the end of the year. Despite the large size of these issues, market experts feel the issues would not create any liquidity issues in the market as foreign funds pour in.
According to the market regulator’s data, foreign institutional investors (FIIs) have pumped in a net Rs 16, 132.60 crore into Indian equities till date in September.
“Liquidity in the system is very good and we have seen in the past that investors need not sell their existing holdings to buy into new issues. However, you may find investors selling Reliance Energy to subscribe to Reliance Petroleum,” said Arun Kejriwal, director of Kejriwal Research and Investment Services.
Reliance Power recently bagged the 4000 MW Sasan ultra-mega power project in Madhya Pradesh and is investing around Rs 20,000 crore the project. Group Chairman Anil Ambani had told shareholders that the company would invest close to Rs 80,000 crore over the next five years to take its power generation capacity from the current 941 MW to 20,000 MW.
Emaar MGF is a 50:50 joint venture between Dubai-based Emaar Properties and Delhi-based MGF. The company is planning to invest over $4 billion (Rs 16,000 crore) in various housing and infrastructure related projects in the country. It has a land bank of 12,544 acres across the country and will use the proceeds from the issue to repay loans up to Rs 1,450.20 crore, and for part payment of land acquisitions, regulatory approvals and project development.