Reliance Power to raise up to 2.9 bln dlrs in India's biggest IPO

MUMBAI (AFP) — Reliance Power, a unit of Reliance Energy, plans to raise up to 2.9 billion dollars in what would be India's biggest public offering, investment bankers said.

The previous highest initial public offer (IPO) was by property giant DLF which raised 2.24 billion dollars last July.

Reliance Power will offer 260 million shares through the IPO or 10.1 percent of the company's capital.

The company aims to raise between 105 billion and 115 billion rupees (2.6 to 2.9 billion dollars) through the offering, which will be open for subscription from January 15 to January 18, investment bankers said. The shares will be offered in the 405 to 450 rupees price band, they said.

Power generation growth will "be similar to what India witnessed in the telecom sector," company chairman Anil Ambani told a news conference.

Reliance Power aims to list on the stock exchange in early February, Ambani said.

"India requires large scale investment in the power sector. According to a recent Central Electrical Authority report, demand for energy is expected to grow by eight percent annually in the five years to 2012," a Reliance Power statement said.

Shares of Reliance Energy, India's second largest utility by market capitalisation, have surged more than 32 percent to 2,510.3 rupees in the past month ahead of the IPO by its Reliance Power subsidiary.

The company has said the issue proceeds will be used to fund construction and development costs of various power projects of its subsidiaries.

Reliance Power is developing 13 medium and large power projects with a combined planned capacity of 28,200 megawatts, the statement said.

Local credit rating agency Crisil awarded the Reliance IPO four out of five points, saying the "fundamentals of the issue are above average in relation to other listed equity securities in India."

To boost retail investor demand, the IPO offers a 20 rupee discount to the issue price which would be determined after the book-building period, bankers said.

Vallabh Bhansali, chairman of Enam Securities, co-book running lead manager to the IPO, said he expected strong demand "seeing the appetite for stocks in the secondary markets."

Reliance Energy grew out of a split two years ago in the Reliance group that was sparked by a family feud.

Anil Ambani took control of the group's telecommunications, power and finance activities while older brother Mukesh Ambani retained the petrochemical and oil business.

Source : afp.google.com