The over subscription of the Initial Public Offering (IPO) of Anil Dhirubhai Ambani group - Reliance Power has made it the largest ever IPO in India. It recorded a 10.5 times over subscription on its first day of offering on Tuesday.
The data on the National Stock Exchange showed that the bid was received for 239.75 crore equity share worth around Rs 109,000 crore on the initial day of offering. The company is expecting to mobilize Rs 11,700 crore through the issue.
IPO’s are offered at a price of Rs 405-450 at a face value of Rs 10 each, the issue invited bids for 2,397, 558, 825 shares.
The overwhelming response by the common people is due to phased payment and discounts. 30% of the IPO’s has been allocated for retail bidders and also for the first time retail bidder is getting Rs 20 discount on issue price. Most of the bid came for the higher price band of 450.
Reliance Power has a plan to build 13 power plants with an installed capacity of 28,000 MW in the next few years. Also it was the first company to be created by Anil Ambani.
Finance Minister P Chidambaram, “It is a reflection of the world community in the future of India... Investors seem to be confident in the future of Indian economy.”
Many experts say that it is difficult to evaluate the accurate value of Reliance Power since it does have any operational power plant and cautioned the investor of over optimistic view of IPO. It is reported that Reliance Power will start generating revenue by 2011.
Howsoever Reliance Power has evolved as a successful future prospect and euphoric Anil Ambani has made a statement that this is perhaps the beginning of ADAG group.
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