Company sources, when contacted, declined to make any official comment on the deal. The 9 per cent stake has its origins in a foreign currency convertible bond (FCCB) issue of $120 million made by the company in October 2002. As per the terms of the FCCB issue, the bonds were convertible at Rs 245 per share. The GDRs arising on conversion of these bonds have now been bought by Capital and Govt of Singapore Investment Corporation.
Standard Chartered Bank had lead-managed the FCCB issue. Each GDR is equivalent to three underlying shares.
Prior to this, the shareholding pattern of REL was thus: Reliance had 58 per cent in the company, financial institutions had 26 per cent, public 11 per cent and foreign institutional investors another 3 per cent.
The secondary market deal comes at a time when the countrys power sector is set to witness major activity with REL drawing up aggressive plans to participate in this change.
The REL mission, excellence in energy, also includes a move to attain global best practices and become a world-class utility. With about five million consumers spanning an area of supply of 1,24,300 sq kms, the company has an installed capacity of 885 MW. The REL group distributes over 15 billion units of power to customers in Mumbai, Delhi and Orissa.
After being the single largest shareholder in the company for over a decade, the Reliance group came to the saddle in REL by way of two open offers, which took its stake finally to 58 per cent. The open offers, according to Reliance, were made to clearly show its seriousness in acquiring management control of the company.
The Reliance gameplan for the power utility, as articulated by REL chairman Anil Ambani in the companys annual report for 2002-03, is to consolidate operations in its existing licensed areas, and to look at opportunities to enter new distribution areas, thereby enhancing the utilitys customer base.
The company is also examining new opportunities in generation of power, with specific reference to maximising feedstock synergies stemming from Reliances exploration and production initiatives in the oil and gas sector.