RELIANCE POWER IPO: STOCK FOR SMALL INVESTORS

The plan to list Reliance Power Limited was a welcome step from R-ADA group and is eagerly anticipated by small investors. The red herring prospectus for the issue was submitted to SEBI on October 3. The company is supposed to sell 11.5% of post paid up capital of the company, which media reports have said may raise $2.8 billion. Probably it will be India’s biggest IPO. Reliance Power also has in interests in infrastructure, telecoms and financial sector. ADAG holds the company through various group companies including Reliance Energy which holds around 50% of the stake.

According to media report around 30% of the shares will be for retail clients, 10% will be for HNIs and rest 60% will be for Institutional Investors. There are reports that the face value of the stock may be of RS 10/- instead of Rs 2/- as initially proposed. link. The issue will definitely require the support from FIIs and DIIs. Some sources informs that the issue may be delayed by some more time. Link.

No doubt it will be a bonanza for retail investors as power sector is the dominant sector for immediate future.

There is some good news for the investors before the issue. Reliance Power has bagged the Krishnapatnam Ultra Mega Power Project. It has already bagged the Sasan and Mundra mega power projects. All the development is likely to make the issue more attractive.

www.bsensedaily.com has furnished a list of projects currently handled by Reliance Power Limited as follows:

• Rosa Phase I, a 600 MW coal-fired project in Uttar Pradesh scheduled to be commissioned in March 2010.
• Rosa Phase II, a 600 MW expansion of Rosa Phase I which is scheduled to be commissioned in September 2010.
• Butibori, a 300 MW coal-fired project scheduled to be commissioned in June 2010.
• Sasan 3,960MW UMPPs promoted and awarded by the Government of India is expected to be the largest pithead coal-fired power project at a single location in India,scheduled to be commissioned by April 2016.
• Shahapur, a 4,000 MW coal-fired(1,200 MW) and combined cycle gas-fired (2,800 MW) project in Shahapur, scheduled to be commissioned in March 2011.
• Urthing Sobla (400 MW), a run-of-the-river hydroelectric project, located on the Daulinganga River in Uttarakhand scheduled to be commissioned in March 2014.
Five other projects—the gas-fired Dadri project (7,480 MW), the coal-fired MP Power project (3,960 MW) and three run-of-the-river hydroelectric projects, Siyom (1,000 MW), Tato II (700 MW) and Kalai II (1,200 MW).

There are some controversies too. ADAG has alleged some market forces working against the mega issue and trying to thwart it. Link. REL investors are unhappy to find that no approval was sought from them for listing the issue as it has direct bearing on the income of REL. and so on. There is already premium on this issue in the grey market and some of the market operators are making losses, as the issue is delayed for various reasons but the grey market premium on the issue is increasing steadily. Link: Reliance Power IPO clouds grey market.

There is already a blog on this mega issue. But the buzz in the overall Indian finance Blogosphere about the mega issue of Reliance Power IPO is mixed and evoking different emotions. Most of the Indian Stock Market Blogs are maintaining a very neutral stand and just passing on the information on the issue only.

Yours truly is very bullish in the growing story of Power stocks and believes that this issue is genuinely going to lift our stock market to a few notches higher.