Reliance Power IPO in Rs 415-450 range

Published By: DNA Business Bureau

Mumbai: Reliance Power, a subsidiary of Reliance Energy, will float India’s largest public issue of Rs 11,700 crore, by selling Rs 10 face value shares in the range of Rs 415 to Rs 450, after the Securities and Exchange Board of India cleared the issue.

The largest IPO to date in India was floated by real estate giant DLF, which had raised Rs 9,187 crore.

Reliance Power will offer 9.95% stake — or 26 crore shares — to the public.

The issue opens on January 15 and closes on 18.

The promoters of Reliance Power — Reliance Energy and AAA Projects, will hold the rest equally, or about 45.025% each.

At the higher end of the price band of Rs 450, this would mean a valuation of about Rs 53,100 crore added to the Reliance Energy shares.

Considering Reliance Energy’s paid-up equity of 23.6 crore shares, the value of its holding in Reliance Power alone works out to roughly Rs 2,250 (Rs 53,100 crore divided by 23.6 crore).

Analysts Shirish Rane and Bhoomika Nair of brokerage house SSKI had, in a report on October 1, estimated the value of Reliance Energy without Reliance Power at Rs 869 per share.

Combining the two takes Reliance Energy’s valuation soaring to over Rs 3,110 per share.

The Reliance Energy share closed around Rs 2,365.50 on Wednesday, up 7.5%.

Retail investors will be asked to pay a lesser amount at bidding, and will have to pay the balance only at allotment, or as per the terms announced.

Reliance Power will be the Anil Ambani group’s primary vehicle for investments in power generation, while Reliance Energy itself is metamorphosing from a transmission & distribution to an infrastructure player.

Reliance Power has lined up projects to generate 24,200 mw through 12 projects.