Investors had banked vehemently on the Reliance Power IPO. Owing to the disapproval of SEBI pertaining to the share price, there was delay in trading of the shares to some extent. 73 times over subscription was reported. The first day of trading was disappointing and economists are of the opinion that a shortage of liquid funds was responsible for the same.
A part of Reliance ADA (Anil Dhirubhai Ambani) Group, Reliance Power Limited is engaged in developing, constructing as well as operating power projects within the country and also in the international arena. The company launched an IPO, the capital raised from which would be used towards various power projects on the cards.
The Reliance Power IPO which made its debut in the stock markets of the country proved to be a “debacle”. Experts state that the probable cause of this failure could be “squeeze in liquidity”.
During the early part of 2008, there were two other companies, which had to pull off their initial public offerings owing to scarce liquidity in the market.
Filing DHRP and SEBI’s disapproval:
Reliance energy IPO, which filed Draft Red Herring Prospectus or DRHP with SEBI was one of the biggest IPOs in the stock markets of India. However, reports suggest that the SEBI or Securities And Exchange Board Of India did not approve of the offer price of the IPO at Rs 2. Owing to this disapproval, the company decided to bring about changes in the same and slated it as Rs 10 instead. The equity shares released through the IPO started trading from February, 2008.
As many as 130 crores of equity shares were issued. Total number of net issues were 114 crores equity shares. It was decided that the promoter contribution was of 16 crores equity shares. Paid up capital(post issue) comprised 11.5% whereas 10.1% was the paid up capital (post issue) pertaining to net issue. Reports suggest that this IPO of $3 billion or Rs 11,900 crore faced an over subscription by 73 times.
Status after first day trading of Reliance Power IPO:
Once it started trading on the BSE or the Bombay Stock Exchange, it fell to Rs 372.3 from Rs 450.
Reliance Power IPO payment procedures:
Two types of payment procedures were recognized with the help of which the investors could avail of the Net Issue. The first payment method was meant for the non institutional buyers as well as retail individual bidders. The second method could be availed by all investors and the QIB or the Qualified institutional bidders were included in this category.
CRISIL IPO Grading:
Reliance Power IPO was graded 4 according to ratings of CRISIL IPO Grade. This implies that the fundamentals of Reliance Power Limited is strong.
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Last Updated on : 30th July 2013