Accordingly, the Mukesh Ambani group began preliminary listing processes around Christmas last year, but the ADAG group was clearly not involved in, or informed about, their moves. Reliance rammed through board meetings of all four soon-to-be-separated companies on a single day in early January to finalise listing-related issues. It then made a detailed listing application to the stock exchanges and obtained clearance from the regulator to list the shares without a public issue under Sec 19 (2)(b) of Sebi regulations. At its recent meeting, the Sebi board even cleared a policy decision to permit demerged companies with a Rs 500 crore market capitalisation to become automatically eligible for derivatives trading.
On January 27, the Mukesh Ambani Group completed the electronic credit of the four ADA group shares to Reliance family investors. Simultaneously, in what may be the last major exercise of its kind, it completed the posting of a humungous 65 lakh physical share certificates to those investors who continue to hold physical share certificates.
Stock exchange sources say a detailed Information Memorandum, required under listing rules, has been filed with the bourses. This means all material documents and agreements are now available for inspection by shareholders for the first time since the demerger.
The Anil Ambani Group wants to decide the formal listing dates
This has led to confusion, created a growing grey market in ADAG shares
Difficult to conceive why Sebi would discourage quick listing of ADAG shares
This has led to confusion and created a rapidly growing grey market in ADAG shares. Brokers report some investors, confused between Reliance Capital and Reliance Capital Ventures, sold shares of the latter as soon as they were credited to their demat accounts. Investors ought to have checked carefully before rushing off to sell. But there would have been no room for confusion if the shares had been listed immediately. Although the grey market in Ahmedabad remains subdued after the IPO scam, Kolkata traders were offering quotes of Rs 261-Rs 271 for Reliance Communication Ventures and Rs 25-28 on Reliance Natural Resources (both have a face value of Rs 5).
Thats not all. The brokerage arm of an aggressive US bank is already hawking a P-note representing the combined underlying value of the demerged ADAG entities; it is being offered to foreign investors at the equivalent price of around Rs 275.
This growing unofficial market is dangerous. It is unclear why the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) have not started listing at least some companies. Informally, sources say the bourses do not want to be caught in the crossfire between the Ambani brothers and are looking to the Securities and Exchange Board of India (Sebi) for direction. However, Sebi sources deny that stock exchanges have sought their advice.
It is difficult to conceive how, or why, the regulator would discourage quick listing of the ADAG shares since it would encourage expansion of grey market trades. Sebi cant prevent investors from striking deals and transferring shares officially credited to their accounts. It is in everybodys interest that the ADAG group companies quickly cut the umbilical chord with Reliance Industries and carve out their own identity in the business world. At current grey market prices for just two ADAG companies, the group seems set to unlock considerable value after listing to notch up an attractive market capitalisation on its own.