Issue Details
Bid/Issue opens: Jan 15, 2008
Bid/Issue closes: Jan 18, 2008
Issue Size: 260,000,000 equity shares of Rs 10 each
Price Band: Rs 405 - 450 per equity share of Rs 10 each
Minimum application: 15 shares, and in multiple of 15 equity shares thereof
Maximum Retail Bid Amount: Rs 100,000
(Note: Retail investors have the option to pay Rs 115. The balance amount would be payable on allotment. The company also plans to offer the retail investors a discount of Rs 20 per share)
Capital Structure
Equity shares outstanding prior to issue: 2,000,000,000 shares of Rs 10 each
Equity shares outstanding after the issue: 2,260,000,000 of Rs 10 each
Present Issue: 260,000,000 shares of Rs 10 each
Background
Reliance Power is part of the Reliance Anil Dhirubhai Ambani Group and was established to develop, construct and operate power projects domestically and internationally. The government's vision of "Power for All" by 2012 will require aggressive growth and increased private sector participation. To capitalize on the opportunity, the company is currently developing 12 medium and large-sized power projects with a combined planned installed capacity of 24,200 MW, one of the largest portfolios of power generation assets under development in India.
The 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 centre. 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) to be fueled primarily by reserves from the Krishna Godavari Basin (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. The company plans to sell the power generated by these projects under a combination of long-term and short-term PPAs to state-owned and private distribution companies and industrial consumers.
Objectives of the issue
Reliance Power plans to use the issue proceeds to fund subsidiaries to part-finance the construction and development costs of its projects under development and for general corporate purposes. The company is pursuing the development of 12 power generation projects which are currently under various stages of development. Out of these 12 projects, one is being executed by company, and 11 projects are being developed by 9 subsidiaries which have been set up to develop these projects.
Key Investment Rationale
Huge demand for power in India
Large portfolio of power projects
Well-diversified portfolio
Reliance ADAG: Experienced group in power sector
Valuation
At the issue price band Rs 405-450, the post issue market capitalisation would range from Rs 91,530 crore to Rs 101,700 crore with proposed installed capacity of 25000 MW.
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