|
|
|
Reliance Power IPO to continue: SC
|
|
Friday, January 11, 2008 |
The Supreme Court today said the initial public offer of Reliance Power Ltd, slated to open on January 15, will go ahead even if any order is passed by any court in the country against the venture.
The IPO of Reliance Power Ltd will continue despite any interim order passed against it by any court," a Bench headed by Chief Justice K G Balakrishnan said.
Anil Ambani Group firm Reliance Power had mentioned a petition, pointing out that a person had filed a law suit in a Mumbai court to restrain it from coming out with its IPO.
The IPO is expected to be the country's biggest sale of shares and raise more than Rs 11,000 crore.
Source : PTILabels: Anil Ambani Group, IPO, Reliance Power, Reliance Power IPO to continue SC, Supreme Court |
|
posted by Unknown @ 8:31 AM  |
|
|
|
|
Promoters seen offering more shares to institutions during IPOs
|
|
Wednesday, January 9, 2008 |
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 |
|
posted by Unknown @ 11:19 PM |
|
|
|
|
SC refuses to quash Dadri land notification for Reliance plant
|
|
Tuesday, January 8, 2008 |
The Supreme Court on Tuesday refused to hear a plea that sought quashing of a Uttar Pradesh government notification allowing Anil Ambani group firm Reliance Power to acquire land for its proposed power project at Dadri.
A three-judge bench headed by Chief Justice K G Balakrishnan questioned the motive of Sahyog Samiti, which claimed to be an association of land owners and had filed the petition making Reliance as one of the parties.
Sahyog Samiti had challenged the notification relating to acquisition of 903.449 hectare land in seven villages of Ghaziabad district. It also alleged that farmers were not adequately compensated for the land.
Senior advocate Mukul Rohatgi, appearing for Reliance, opposed the PIL and said it was politically motivated to harm the company that was coming out with its initial public offer.
"It is a Rs 10,000 crore power project at Dadri. This petition is aimed to hit me (Reliance Power) when we are planning to bring our IPO. My IPO is coming on January 15," Rohatgi contended before the Bench that also comprised Justices R V Raveendran and J M Panchal.
Reliance Power intends to raise almost three billion dollars through the country's biggest initial public offer.
The Bench directed the association to file details of the landowners whom it claimed to be representing.
"What cause you are promoting we don't know. It would have been fine if the landowners have approached us. You disclose us who are the land owners (represented by the association)," the bench said.
Source : Hindu.comLabels: IPO, Reliance Plant, Reliance Power, SC refuses to quash Dadri land notification for Reliance plant |
|
posted by Unknown @ 8:36 AM |
|
|
|
|
A right royal abuse of power - Reliance Power IPO
|
|
Monday, January 7, 2008 |
The most awaited event of the Indian primary market calendar is here. Reliance Power may have priced its IPO in the Rs 415-450 band but the active grey market price is Rs 900. This gives Reliance Power a potential listing market capitalisation of Rs 2,00,000 crore. With zero installed capacity today, expected generation capacity of 6,000 megawatts by 2011 and 26,000 MW by 2016. NTPC, in itself a richly valued stock, has an installed capacity of 27,000 MW and commands a similar market cap. The market has simply taken an eight year leap and priced it in the Reliance Power stock today. I find that staggering.
A look at the ratios look even more mind numbing. This IPO money is being raised to execute about 7,000 MW of capacity. That should be done by 2012. That year, if all goes perfectly, Reliance Power will have revenues of Rs 7,700 crore, EPS of under Rs 8 and a book value of Rs 70. At the listing price of Rs 900, the stock would be trading at a 2012 price-earning ratio of 110, a price to book value ratio of 13 and a market cap to sales ratio of 26. These are four-year forward ratios, remember. The ratios moderate somewhat for 2016 but by then much further dilution would have happened to finance the additional capacity so the market cap would balloon substantially.
This is madness. While many explanations abound on how such valuations could be justified, this is so similar to the 100-plus PEs the market gave freely to information technology stocks back in 2000. While all of us know how that story finally ended, we should also remember how long that madness continued. The power madness, too, will end, sector tailwind notwithstanding, but it may continue longer than we think it can before fizzling out. While it lasts, the most expensive stock in the sector will become the valuation benchmark and will pull the others into the clouds. Just remember the old adage: those who forget history are doomed to repeat it.
- By Udayan Mukherjee,
(The writer is Executive Editor, CNBC-TV18)
Source : http://paisapower.blogspot.com/Labels: A right royal abuse of power - Reliance Power IPO, Grey Market, IPO, Reliance Power, Reliance Power IPO |
|
posted by Unknown @ 10:03 PM |
|
|
|
|
Mkts to remain positive till Rel Power listing: Emkay Share
|
|
|
 Krishna Kumar Karwa, MD, Emkay Share & Stockbrokers, said the markets would remain positive on local support in the face on an onslaught of negative news. "For the next few days, the markets will remain positive till the listing of Reliance Power."
He feels that investors should re-evaluate their portfolios and take money off the table.
Excerpts from CNBC-TV18's exclusive interview with Krishna Kumar Karwa:
Q: How are you feeling global weakness on one hand and tremendous local momentum on the other? How do you think things will pan out from here?
A: Its local versus global and there is so much local euphoria versus global cues, which are not at all positive. Investors need to control their greed now and that’s the key thing that we need to take of. As far as the markets are concerned local factors maybe able to support the market for some more time in the face of the overseas onslaught and we maybe able to close the markets in the next two-three days on a stable note.
But slightly longer-term till the IPO of Reliance Power things are going to be positive till listing etc. but investors need to now evaluate their portfolios and understand their risk appetite and take some off the table rather than getting taken in by the momentum. That’s what we think should be the way to move forward.
Q: What’s a good tactical approach to the market right now. Would you advice your clients to increase their cash positions or just remain invested through earnings and perhaps right up till the Budget?
A: I think the tactical approach should be the way the markets are euphoric markets, investors should be valuing their portfolio on a regular basis maybe weekly basis and arrive at their risk appetite and whatever excess gain that they are seeing on their portfolio that should be converted into cash rather than just allowing paper profits and paper valuations to go beyond their risk appetite its better to have some money off the table and into the bank that’s the strategy I would be recommending to clients as such.
So continuous evaluation of portfolios and coming out of weaker stocks where one is not very clear about the fundamentals etc rather than following and getting into each and every stock which is been recommended. That’s the strategy that investors should be adopting and that’s what we are recommending.
Q: What’s the call on Reliance Power?
A: Reliance Power, if one looks at the gray market premium, a lot of momentum investing and the IPO will obviously going to be a very successful IPO. But the point is that we have NTPC at Rs 2,25,000 cr marketcap and with 27,000 mega watts capacity versus that including the gray market prices. Now Reliance Power is also expecting to have a listing market cap of Rs 2,,25,000 crore and they will be probably adding 25,000 mega watts capacity in the next 5-7 years as such.
So I believe that lot of investing will happen in NTPC if Reliance Power valuations sustain. So for listing gains everybody is applying and long-term everything is good but at current prices, I think there is lot of profit taking on listing.
Source : CNBC-TV18Labels: Emkay Share and Stockbrokers, IPO, Krishna Kumar Karwa, MD, Mkts to remain positive till Rel Power listing, Reliance Power, Reliance Power IPO |
|
posted by Unknown @ 2:08 AM |
|
|
|
|
Reliance Power will oversubscribe hopelessly
|
|
|
 Q: The space everyone will talk about from now up until when the IPO kicks off its power. What’s a good way to approach Reliance Power?
A: I don’t think everybody will get much allotment in the Reliance Power IPO, because it will be hopelessly oversubscribed. So you need to now focus your eyes on what happens post-listing and when you take a look at the grey market then you worry a little bit, not a little bit more than a little bit because the grey market price is somewhere around Rs 900 that’s double of the IPO price. Whatever good to that one is heard from the management on the Reliance Power IPO and there were many positives, which came through from the media conference at Rs 900 its very difficult unless the market remains in this very frothy frame of mind on the sector its extremely difficult to justify that price because at Rs 900 you are talking about 2 lakh crore marketcap for Reliance Power, you got to look four-five years out and still you will be scratching your heads to justify that.
Reliance Industries one-year back in February 2007 was at 2 lakh crores marketcap and not even a year has passed since Reliance crossed over that 2 lakh crore marketcap. But that’s apples and oranges just look at Reliance Power at Rs 900 our estimates are that in FY11 we are sitting in FY08 right now, so straight away you take a leap of three-years for generation and you may find that they have 6,000 megawatts in FY11 that’s three-years down the line assuming faultless execution.
You want to look at sales and earnings you take a bigger leap go to FY13 that’s five-years from now, FY13 what the pre-multiple would be on our expected delivery - 90. We are talking about 90-times FY13 earnings if all goes well on execution for Reliance Power at Rs 900. If you look at four-years out FY012 and attribute some sales number to the kind of generation that they have, you are almost talking about 30-times sales for FY012 that’s four-years down the line. It’s a good space and probably this company will do lots of exciting things down the line but sitting out here to justify Rs 900 per share on Reliance Power even if you have that perspective of three-four years, five-years down the line seems like a big leap of faith.
Source : MoneyControlLabels: Reliance Power, Reliance Power IPO, Reliance Power will oversubscribe hopelessly |
|
posted by Unknown @ 1:53 AM |
|
|
|
|
Power IPOs set to cross Rs 30,000 cr mark this year
|
|
Saturday, January 5, 2008 |
To match last year's total fund mobilisation.
This will be the year of power IPOs with a total of over Rs 30,000 crore likely to be collected by Indian power companies, after valuations of the listed power soaring in the recent past.
Reliance Power, which is hitting the market next week with an offering of nearly Rs 12,000 crore, will set the trend for a slew of power IPOs from other companies including Sterlite Energy (Rs 4,000-8,000 crore), JSW Energy (Rs4,000 crore), JP Associates (Rs 4,000 crore) which have already announced big share offer plans.
Other groups that are evaluating similar options include Hyderabad-based GMR Group, Patel Engineering and the Alps group.
If all these plans fructify, this year’s power IPO collections alone will match last year’s total IPO mobilisations of Rs 34,000 crore.
Investment bankers said companies are unlocking value by hiving off their power ventures into separate companies, where big institutional investors including foreign funds and private equity (PE) firms are keen to buy equity stakes, expecting big returns. Mutual funds have also started showing interest towards the infrastructure sector, they said.
Brijesh Koshal, head of infrastructure practice, Enam Securities, said companies are getting valued close to their production stage, which may be 4-5 years away. “Once investors trust the promoters, they are willing to value projects close to commercial productions. Power is going to be deficit in the country for the next 10 years, and the market is paying today for future expectations, irrespective of immediate returns,” he said.
According to the Central Electricity Authority, the government has set a target of adding 78,577 mw generation capacity in the Five-year Plan ending March 2012 from 132,330 mw at the end of March 2007. Although power stocks are usually considered annuity returns stocks, analysts said that the regulated projects alone can generate about 14-17 per cent return on equity. Unregulated projects depending on the individual companies’ efficiency can generate about 45-46 per cent returns.
No wonder, the BSE Power Index, which tracks the price movements of companies such as Tata Power, Reliance Energy, ABB and Siemens, has gained nearly 12 per cent in less than two months.
Analysts said several Indian companies have captive power plants. Eventually, these companies are expected to set up ‘merchant power plants’, which are partially regulated now. Market players anticipate that regulations may allow producers to set a merchant power project in the future.
Reliance Power – the company which has a record 28,200 mw of power generation capacity in the pipeline – will offer its shares for sale to the public from January 15-18 at a price band of Rs 405-450 per share.
“Several companies are keenly watching this high-profile IPO. If the company lists at 75-100 percent premium, we can expect several other companies also unfolding their plans for power IPOs,” said another investment banker.
Source : http://www.business-standard.comLabels: Brijesh Koshal head of infrastructure practice, fund mobilisation, Power IPOs, Reliance Power, set to cross |
|
posted by Unknown @ 9:08 PM |
|
|
|
|
|
