Billionaire Anil Ambani’s Reliance Power Ltd will hit the market on 15 January for raising an estimated $3 billion in the country’s biggest initial public offering (IPO).
The issue closes on January 18 and the company has fixed a price band of Rs405-450 per share, an Anil Ambani Group spokesperson said on Wednesday.
Reliance Power’s IPO would be the first one to offer a discount to retail investors, as also an option of staggered payment to all segments.
Qualified institutional buyers would be allowed to pay only 10% initially, while high net worth individuals and retail investors would have to pay only 25% of the total cost as initial payment. The remaining amount would have to be paid after allotment of shares, the spokesperson said.
Parent Reliance Energy Ltd quadrupled in value last year, the best performing stock on India’s benchmark index, as the government plans to invest $200 billion (Rs7.88 trillion) in electricity generation and distribution in seven years to sustain record economic growth.
“In this bull market, the issue will sail through comfortably,” said Murali Krishnan, head of research at MF Global Ltd in Mumbai. “The amount of IPOs lined up this year, which could be more than $20 billion, could bring down the secondary market as investors sell holdings to buy in IPOs.”
The Bombay Stock Exchange’s sensitive index gained 47% in 2007, the biggest rise in four years, spurring companies to raise a record $8.5 billion in IPOs, according to data compiled by Bloomberg. Reliance Power will surpass India’s IPO record set by real estate company DLF Ltd, which raised $2.3 billion last year. The share sale will help it fund gas, coal and hydropower generation projects in India, the Mumbai-based company said on 30 September after Reliance Energy’s board approved the plan.
ABN Amro Rothschild, Deutsche Bank AG, Enam Securities Pvt., ICICI Securities Ltd, JM Financial Consultants Pvt Ltd, JPMorgan Chase & Co., Kotak Mahindra Capital Co. and UBS AG will arrange the IPO.
Bloomberg contributed to this story.