Reliance Power is considering a bonus issue for its non-promoter investors in what is seen as an unprecedented move to appease those who had lost out after the company?s IPO fared poorly on listing.
A board meeting to finalise the modalities has been convened on February 24. A company release said the bonus shares would reduce the holding cost of the investors in the IPO. Closing on January 18, the issue had raised a record Rs 7.50 lakh crore from around 500 institutional and five million retail investors.
After listing on February 11 , the issue, priced at Rs 450 a share for institutions and Rs 430 for retail investors, opened at Rs 530, only to crash to Rs 332 (Friday closing: Rs 384.70). Even after staging a certain degree of recovery, the share price has shown a sliding trend.
Much of this can be attributed to the slump in the global and domestic markets. A perceived high pricing is also seen as the other cause.
The company, without providing any clarity on project implementation, and with just plans of implementing power projects of over 28,000 mw, was seen by a section of analysts as seeking to charge a premium for revenue and earnings that would emanate after three years.
But the company on Sunday alleged that there were vested interests that caused the share to fall after listing and, thereby, tarnish the Anil Dhirubhai Ambani Group?s image.
The group has formally written to Securities & Exchange Board of India, seeking a probe into this matter.
Sections of investors and analysts, however, are sore with the company for the high issue price it charged.
It is estimated investors have lost more than Rs 2,000 crore at various stages since listing. But some analysts also reckon that Sunday?s announcement will be seen as a genuine move by a company towards mitigating shareholder woes. Monday, obviously, will be the day to track developments.
The bonus issue move, according to the management, will result in dilution of the promoter group?s shareholding in the company. The promoters have indicated that they will accept this ?in the broader interest of protecting and enhancing value for over four million institutional and retail investors.?
Sam Ghosh to head RCap
Reliance Anil Dhirubhai Ambani Group is roping in Sam Ghosh, chief of Allianz AG?s operations in West Asia and India, as the new boss of Reliance Capital Ltd (RCL). It is believed RCL managing director Amitabh Chaturvedi is on his way out. When contacted, ADAG executives did not confirm Ghosh?s entry into RCL.