RPL IPO to open on January 15

PFW Bureau / Jan 5

Reliance Power Limited (RPL), part of the Reliance Anil Dhirubhai Ambani Group (R-ADAG) and established to develop, construct and operate power projects domestically, is entering the capital market with its initial public offering (IPO) of 260 million equity shares of Rs 10 each for cash, at a price to be decided through a 100% book building process.  

Explaining the details of the IPO, Anil Ambani, chairman, R-ADAG told reporters on Friday in Mumbai that the Issue will open on January 15, 2008, and will close on January 18, 2008. The price band has been fixed between Rs 405 and Rs 450 per equity share. A discount of Rs 20 to the issue price determined pursuant to completion of book building process shall be offered to retail individual bidders, he said.  

The IPO comprises a net issue to the public of 228,000,000 equity shares and a promoters’ contribution of 32,000,000 equity shares. The issue will constitute 11.5% of the post-issue paid-up capital of the company and the net issue will constitute 10.1% of the post-Issue paid-up capital of the company.

At least 60% of the net issue will be allocated on a proportionate basis to Qualified Institutional Buyers (QIBs), out of which 5% shall be available for allocation on a proportionate basis to Mutual Funds (MF) only. Further, at least 10% of the net issue will be available for allocation on a proportionate basis to non-institutional bidders and at least 30% of the net issue will be available for allocation on a proportionate basis to retail individual bidders, subject to valid bids being received at or above the issue price.

According to the 17th EPS report by Central Electricity Authority, demand for energy is expected to grow at an average annual rate of 8% during the 11th Plan period (2007-12) and at an average annual rate of 9% during the 12th Plan period (2012-17).

To help meet this demand, RPL is presently developing 13 medium and large sized power projects with a combined planned installed capacity of 28,200 MW, one of the largest portfolios of power generation assets under development in India. Its 13 power projects are planned to be diverse in geographic location, fuel type, fuel source and off-take, and each project is planned to be strategically located near an available fuel supply or load center. The identified project sites are located in western India (12,220 MW), northern India (9,080 MW), northeastern India (2,900 MW) and southern India (4,000 MW).

They include seven coal-fired projects (14,620 MW) to be fueled by reserves from captive mines and supplies from India and abroad, two gas-fired projects (10,280 MW) planned to be fueled primarily by reserves from the Krishna Godavari Basin (the KG Basin) off the east coast of India, and four hydroelectric projects (3,300 MW), three of them in Arunachal Pradesh and one in Uttarakhand. It intends to sell the power generated by these projects under a combination of long-term and short-term Power Purchase Agreements to state-owned and private distribution companies and industrial consumers.

The proceeds of the issue will be used, amongst others, towards funding subsidiaries to part-finance the construction and development costs of certain projects. These include: 600 MW Rosa Phase I (Uttar Pradesh), 600 MW Rosa Phase II (Uttar Pradesh), 300 MW Butibori (Maharashtra), 3,960 MW Sasan (Madhya Pradesh), 1,200 MW Shahapur Coal (Maharashtra) and 400 MW Urthing Sobla (Uttarakhand).

The company intends to develop additional power projects to help meet the significant demand in power. Seven other projects — two gas-fired projects Dadri (7,480 MW) and Shahapur Gas (2,800 MW), two coal-fired projects MP Power (3,960 MW) and Krishnapatnam (4,000 MW) and three run-of-the-river hydroelectric projects, Siyom (1,000 MW), Tato II (700 MW) and Kalai II (1,200 MW) — are in various stages of development. Dadri, the 7,480 MW project to be located in Uttar Pradesh, is expected to be the largest gas-fired power project at a single location in the world. Sasan, the 3,960 MW coal-fired UMPP to be located in Madhya Pradesh, is expected to be the largest pithead coal-fired power project at a single location in India.

Anil Ambani said that the equity shares, offered through this IPO, are proposed to be listed on Bombay Stock Exchange Limited (BSE) and National Stock Exchange (NSE) in the first week of February, 2007.

This Issue has been graded by CRISIL Limited as CRISIL IPO GRADE 4/5, indicating that the fundamentals of the issue are above average (in relation to other listed equity securities in India) and by ICRA Limited as ICRA IPO Grade 4, indicating above average fundamentals.

The Book Running Lead Managers  (BMLM) to the Issue are -  Kotak Mahindra Capital Company Limited, UBS Securities India Private Limited, ABN AMRO Securities (India) Private Limited, Deutsche Equities India Private Limited, Enam Securities Private Limited, ICICI Securities Limited, JM Financial Consultants Private Limited, J. P. Morgan India Private Limited. The co-BRLM are Macquarie India Advisory Services Private Limited and SBI Capital Markets Limited.

This is to draw the attentions of the retail investors that the SAT has admitted a petition of Rajkot Saher, an investors association, on January 4 challenging the bidding process of RPL IPO from January 15. SAT will hear all the concerned parties on January 14 and give its final order on the same day.