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Reliance Energy IPO sets world record

The initial public offering by Reliance Energy has garnered an astronomical $190 billion.

business Updated: Jan 19, 2008 21:33 IST

The just-concluded maiden public issue of Reliance Power, which was oversubscribed 73 times and garnered an astronomical $190 billion, has created many world records, its chairman Anil Ambani said on Saturday.

"It is the largest subscription of any IPO (initial public offering) anywhere in the history of global capital markets, with a record five million applicants," a beaming Ambani said at a press conference here, a day after the issue's conclusion.

"When Reliance Power lists early February, it will be among the 10 top listed companies in India with the largest number of shareholders in any listed Indian company or in the world," he said.

"If we assume it lists at the issue price of Rs.450, the market capitalization for the group will be around $100 billion," he said, adding that it will make his Reliance Anil Dirubhai Ambani Group the second largest in India in terms of market capitalisation.

Ambani said the issue came at a time when the Indian markets and global markets were experiencing a meltdown but yet attracted a record subscription of $100 billion from foreign funds, equalling 40 percent of India's foreign exchange.

"The inflow amounts to one-and-a-half times the cumulative foreign institutional investment (FII) flows into India since 1992. The Reliance Power IPO is greater than the combined subscriptions recorded by five top in India so far."

The five top public issues in the past were those by Mundra Port, Power Grid Corp, Reliance Petroleum, Idea and Power Finance Corp.

According to Ambani, provisional calculations revealed the issue was subscribed 73 times over. While the amount set aside for qualified institutional buyers, including foreign funds, was oversubscribed 82.5 times, that for retail buyers was subscribed 14.4 times over.

He said the company would fix the issue price at the top end of the price band at Rs.450 per share, with a discount of Rs.20 per share for retail investors - another first in India.

The Reliance group, that now stands divided between Anil and his elder brother Mukesh, came with its first public offer 31 years ago for launching a textiles unit. The issue then was oversubscribed eight times.

In contrast, when the Reliance Power IPO opened itself to subscriptions Jan 15, it was fully subscribed twice over in the first 58 seconds. By the end of the opening day, it was subscribed 10 times over, Ambani said.

The company notched another record in launching the issue within eight working days of receiving regulatory approvals Jan 2, he added. It also distributed over 40 million application forms, and involved 177 bank branches at 126 bidding centres.

Ambani said after his group was carved out of the larger Reliance empire in June 2006, the market capitalisation had gone up from $4 billion to $100 billion.

The companies under the fold include Reliance Communication, Reliance Capital, Reliance Power, Reliance Natural Resources, Adlabs and Reliance Energy.

Reliance Power proposes to use the funds to build power generation units across the country. As per company officials, projects worth 28,000 MW are in the pipeline.

"This is the largest portfolio of power generation within a geographical area or a group anywhere in the world," Ambani had told a press conference earlier. The government envisages an addition of 80,000 MW during the 11th five-year plan (2007-2012).

The company, which is an associate of Reliance Energy, was in November awarded the 4,000-MW Krishnapatnam power project in Andhra Pradesh, with the lowest bid for a tariff of Rs.2.33 per unit among all qualified bidders.

Another major project of the company was the 4,000-MW Sasan power project in Madhya Pradesh, awarded in August 2007.