Reliance IPO to be India's biggest

India's Reliance Power Ltd is set to launch an initial public offering to raise up to $2.97 billion in the country's biggest IPO, three investment banking sources close to the deal said yesterday.

The company will issue 260 million shares at an indicated price band of 405-450 rupees ($10.3-$11.4) each, the sources at banks that are managers to the issue said.

The offering is likely to open on January 15 and close on January 18, they said.

A Reliance Power spokesman declined comment, saying a final approval was awaited.

The company, which is 50 percent owned by utility Reliance Energy Ltd, plans to use the funds from the issue to build power plants across the country.

Dhirubhai Anil Ambani Group, which controls Reliance Energy, has said the IPO entails a sale of a 10.1 percent stake and media reports earlier said that could raise up to $2.8 billion.

The group, which also has interests in telecoms, financial services, infrastructure and entertainment, has said it planned to offer up to 30 percent of the shares to retail clients, with a further 10 percent going to wealthy individuals.

Institutional investors will be offered 60 percent, and may get more if retail demand is weak, it has said.

India's market regulator last week disposed of a complaint against the offering, and directed the group's quota in the offering, or 20 percent of the capital, be locked-in for five years from the date of allotment.

"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 issue is managed by UBS, ABN AMRO, JPMorgan, Deutsche Bank, Enam Securities, ICICI Securities, JM Financial and Kotak Mahindra Capital.

Macquarie and SBI Capital Markets are co-managers.

Last July, real estate firm DLF Ltd had raised $2.25 billion in India's biggest IPO to date.

Indian firms raised $8.2 billion from 88 IPOs in 2007, data from Thomson Financial showed, compared with $4.7 billion in 2006, helped by a stock market that rose more than 47 percent.

Agencies

(China Daily 01/03/2008 page17)