By IANS
New Delhi : India’s largest equity offer by Reliance Power mustered an equally large response with a subscription of 72.57 times over, as investors jostled to beat the Friday deadline despite another major crash on the bourses.
Against the 228 million shares on offer, the Anil Dhirubhai Ambani-led company received bids for a whopping 16,548,002,625 shares by 5 pm on the closing say, in what analysts said was a record in the history of Indian stock markets.
A crash of 687.12 points, or 3.49 percent, in a major stock index did not dampen sentiments for the issue, and analysts said people might have liquidated a part of their holdings in other stocks to subscribe to Reliance Power shares.
“This kind of response has not been seen in recent times. What is noteworthy is that the issue invited such unprecedented response despite a major crash in the Indian stock markets,” said an analyst with one of the lead runners here.
The company had set the issue price in a band of Rs.405-450 with a Rs.20 rebate for retail investors for whom 30 percent of the 228 million shares on offer was set aside.
While institutional buyers were required to pay 10 percent of the subscription money on application, retail investors had to put in Rs.115 or around 25 percent of the issue price.
In addition, Ambani and associates had already bought the promoters’ stake of 32 million shares at the upper band of Rs.450 per share on the opening day Jan 15.
The fact that the response to the issue would be overwhelming was evident within minutes of the issue’s opening Jan 15, since the entire issue size on offer was lapped up by investors. The day ended with an over-subscription of 10.5 times.
The largest public issue previously, that of the New Delhi-based DLF Ltd last year, was able to muster $2.4 billion. Offers by Cairn India, Tata Consultancy Services and NTPC Ltd were also sizeable.
In terms of demand, the Mundra Port Special Economic Zone had evoked the biggest demand, surpassed by Reliance Power issue now, having received bids to the tune of Rs.2,000 billion, or $50 billion at prevailing exchange rate.
Reliance Power proposes to use the funds to build power generation units across the country with the funds. 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 in 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.