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Rel Power IPO to see 100% subscription in NII: Experts
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Wednesday, January 9, 2008 |
There is a mad rush for IPO funding now a days. Looking at recent big IPOs like Mundra Port, in which NII category subscribed 154 times of their reserved portion of shares and Reliance Petroleum's NII category got subscribed 58 times.
Reliance Power IPO
There has been huge rush for Reliance Power IPO after looking at its pre IPO response.
The IPO price band is between Rs 405-450 per share and lot size is 15 shares and in multiples thereof.
It will open on January 15 and close on January 18, 2008. The company is entering capital market with a public issue of 26 crore equity shares. Net issue to the public will be 22.8 crore shares. The company is going to raise more than Rs 10,000 crore from this IPO.
There are 2.28 crore shares available in the NII category, which is 10% of the total shares available in the IPO.
Comment:
This is the first IPO from Anil Dhirubhai Ambani Group and experts say that at least 100 times subscription is likely in NII category.
Moneycontrol learnt that the grey market premium for the Reliane Power IPO is around Rs 390-400.
Reliance Industries group companies have always delivered value in the past. Retail investors are pooling so that they can take leveraged bets.
If we assume that the IPO has subscribed 100 times in NII category and listing price at Rs 850 then the return for non institutional investors on investment is at 5.7%.
Source : MoneyControlLabels: per share and lot size, Rel Power IPO, Rel Power IPO to see 100% subscription in NII Experts, Reliance, Reliance Petrolium, Reliance Power IPO, Reliance Power IPO price band |
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posted by Unknown @ 11:24 PM  |
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Promoters seen offering more shares to institutions during IPOs
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Public issues, it seems, are not quite meant for the ‘public’. At a time when more and more retail investors are looking to hop on to the equity bandwagon, promoters have taken refuge in a decade-old regulation that allows them to dole out more shares to institutional bidders at the cost of retail ones.
And the sad part is that this is perfectly legal and only an initiative from the market regulator can create a more level-playing field for small investors.
According to capital market regulations, if promoters dilute more than 25% during an initial public offer (IPO), retail investors can be allotted 35% of the issue, while institutional category and HNI segment commands 50% and 15%, respectively.
However, promoters are nowadays diluting less than 25%, as this allows them to cap the retail portion at a maximum of 30%. The institutional portion in such cases go up by 10%. For small investors, this 5% difference can be substantial when the issue size is large.
Interestingly, this special clause — Rule 19(2)(b) — was introduced by the Securities and Exchange Board of India (Sebi) in 1999 for technology companies wherein promoters were allowed to dilute 10% if the issue size was more than Rs 100 crore.
This also meant that QIBs could be allotted 60%, while HNI and retail portion was capped at 10% and 30% respectively. While initially the special clause was applicable only to technology companies, it was subsequently extended to all sectors.
Meanwhile, two of the most high-profile issues in recent times — Reliance Power and Future Capital — that are about to hit the market shortly are also using this age-old clause (by diluting only around 10-12%) to allocate more to the institutional investors. For instance, Reliance Power, where 22.8 crore shares are on offer, retail investors can bid for only 6.84 crore shares.
While this trend has been on an upswing for quite some time now, the recent past has seen a near complete disappearance of issues where retail investors were offered 35% of the total issue. Industry watchers say this trend is killing the very concept of ‘public holding’ in a publicly listed company.
“The clause was valid when it was introduced”, says Prithvi Haldea of Prime Database, adding that now times have changed and there is an urgent need to revisit it. “May be increasing the Rs 100 crore limit to Rs 300 crore or Rs 500 crore could be a practical option as there is enough depth in the market to absorb such an issue,” he said.
The effect of this clause can be gauged from the shareholding pattern of some of the companies that turned ‘public’ last year.
The retail holding in Puravankara Projects is a lowly 0.8%. In the case of Motilal Oswal Securities and Omaxe, the retail stake is 3.43% and 3%, respectively. After the mega-sized public issue of DLF, retail investors have a 2.25% stake in the real estate major. In Vishal Retail, public stake is less than 5%.
However, merchant bankers, quite expectedly, are happy as it allows them to allocate more shares to institutional investors. “Promoters want more institutional investors as their shareholders”, said an investment banker on condition of anonymity. “Ultimately, it is the name of the foreign or domestic institutional entities that will attract more investors,” he added.
Some bankers are also of the view that promoters like to leave some room for a follow-on offering or a qualified institutional placement and so decide against a dilution of around 25%. However, bankers remain tight-lipped when questioned about the importance of the law in the current scenario.
Source : http://economictimes.indiatimes.comLabels: IPO, Promoters seen offering more shares to institutions during IPOs, Public issues, Rel Power IPO, Reliance, Reliance Power |
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posted by Unknown @ 11:19 PM |
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Reliance Power IPO: Make money without investing
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Brokerages and institutional investors are reportedly hiring demat accounts of retail investors for a one-time payment of Rs 9,000 -10,000 to bid for the Reliance Power IPO under retail investors’ quota. The grey market reportedly offers Rs 10,000! UNDER THE arrangement, the broker will pay Rs 10,000, while the investor will bid for the IPO (maximum Rs 100,000) on behalf of the broker and will sell the allotted shares on the listing day. Moreover, a majority of the retail applicants are likely to get a fair share of the allotment given the huge issue size (26 crore equity shares with a face value of 10 rupees each). It’s a win-win deal. While the broker stands to make more listing gains on the back of higher allotment, the demat account holders will receive Rs 10,000 for leasing their account for a period of just three weeks. Given that Reliance Power shares are trading at a premium of Rs 400 in the grey market, the brokers will be able to generate substantial gains over and above the rent paid. Reliance Power IPO, the first from the Anil Dhirubhai Ambani stable (ADAG), is slated to become the largest initial public offering on the Indian bourses, eclipsing realty giant DLF’s IPO. The IPO is scheduled to open for subscription between January 15 and January 19 with a price band of Rs 405-450. The shares are likely to get listed on BSE (Bombay Stock Exchange) as well as NSE (National Stock Exchange) in the first week of February. Further, in line with the Reliance group’s tradition of making IPO applications retail investor-friendly, Reliance Power may dole out several incentives, such as a flat Rs 20 discount on the offer price that will be determined through cent percent book-building. Reliance Power management may also allow retail investors to pay just Rs 115 per share at the time of applying. Brokers and institutional investors who are preparing to bid through the retail route also stand to gain from such arrangements. Most analysts believe that the Reliance Power IPO will make significant listing gains, though they are a bit cautious while trying to derive a fair value of the stock in the absence of meaningful earnings, given that all its projects are in the implementation phase. However, the traditional euphoria surrounding a Reliance brand IPO has spilled over to Reliance Power and the issue is likely to be heavily oversubscribed. Reliance Power is currently developing 13 medium and large-sized power projects with a combined planned installed capacity of 28,200 MW. The identified project sites are located in western India (12,220 MW), northern India (9,080 MW), north-eastern India (2,900 MW) and southern India (4,000 MW). Source : http://www.merinews.comLabels: Brokerages, power projects, Rel Power IPO, Reliance Power IPO, Reliance Power IPO: Make money without investing, win-win deal |
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posted by Unknown @ 11:14 PM |
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Retail investors get discount in Rel Power IPO
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Friday, January 4, 2008 |
Reliance Power is eyeing a mop up of Rs 10,530-11,700 crore at the lower and upper price band of the mega initial public offering. The 26-crore equity IPO opens between Jan 15-18 in the price band Rs 405-450 per share of face value Rs 10 each.
Retail investors will get a discount of Rs 20 per share on the issue price which will be decided through book building process. However, the public offer is only for 30 per cent of the issue.
The company will not be making a pre-IPO placement, said Anil Ambani, chairman of Reliance Power at a press meet here. The company expects to list by the first week of February, he said. Net issue would constitute 10.1 per cent of the post-issue paid up capital. Outstanding shares post issue will be 226 crore equity shares.
Source : http://economictimes.indiatimes.comLabels: 226 Crore Equity Shares, Anil Ambani, Press Meet, Rel Power IPO, Reliance Power IPO, Reliance Power is eyeing a mop up, Retail Investor |
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posted by Unknown @ 8:27 AM |
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Grey mart: Rs 1L in Rel Power IPO will earn 9% in 20 days
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Thursday, January 3, 2008 |
Grey mart: Rs 1L in Rel Power IPO will earn 9% in 20 days
Reliance Power (REPL) seems to have electrified grey market operations in Ahmedabad with operators willing to shell out as much as Rs 9,000 for every application of Rs 1 lakh.
In the bustling grey market in Gujarat, such high rates are unheard of. The last benchmark for hectic activity was the Mundra Port and SEZ IPO in November when the grey market started buying applications for Rs 7,500 in the last stages of the issue.
With the REPL offer ready to hit the market on January 15, the grey market is trading the shares and the applications. It basically means that if you have Rs 1 lakh to invest when the IPO opens, you have a secured 9% return within 20 days of closing of the issue when the stock would be listed.
After Sebi cleared REPL’s IPO, grey markets had resumed trading in the stock with premium saudas (trades) at Rs 340-350 and application buying rate at Rs 7,500. While the premium has zoomed to Rs 390-400, the applications rate touched Rs 9,000 and could break the Rs 10,000 mark by the time the IPO hits the market, sources said.
The excitement on the counter in the grey market has come on the heels of news that REPL will offer 5% discount to retail investors, who will also get an option to pay only 25% of IPO amount at the time of application.
Source : http://timesofindia.indiatimes.comLabels: Grey Market, IPO, Rel Power IPO, REPL, Retail Investor, SEBI |
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posted by Unknown @ 7:25 PM |
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