Reliance Power approves free bonus share ratio of 3:5
25 Feb 2008
The board of directors of Reliance Power yesterday approved the issue of free bonus shares to all categories of shareholders, excluding the promoter group (Reliance Energy Ltd. and the Anil Dhirubhai Ambani Group), in the ratio of three shares for every five shares held. The bonus issue is subject to statutory approvals. (See: Reliance Power mulls issuing free bonus shares after sub prime listing)
The proposed bonus offering will result in reduction of the cost of Reliance Power shares below the IPO price to:
- Rs269 per share for retail investors, lowering the IPO price of Rs430 by 40 per cent
- Rs281 per share for other investors, 37 per cent below the IPO price of Rs450
Group promoter Anil Ambani, chairman, Reliance ADA Group, simultaneously announced a voluntary contribution of 2.6 per cent of his shareholding in Reliance Power to Reliance Energy Ltd., to protect the company from any dilution of its existing 45-per cent stake in Reliance Power, as a result of the bonus proposal.
Accordingly, Reliance Energy's stake in Reliance Power will be maintained at the existing level of 45 per cent. The revised shareholding pattern of Reliance Power will now be:
| Existing | Proposed | |
| Anil D Ambani | 45% | 40% |
| Reliance Energy | 45% | 45% |
| Public shareholders | 10% | 15% |
''The reduction of promoter Anil Ambani's shareholding in Reliance Power by 5 per cent from 45 per cent to 40 per cent, represents a transfer of nearly Rs5,000 crore ($1.2 billion) by him, in favour of nearly six million investors in Reliance Energy and Reliance Power,'' said the company in a communiqué.
Ambani said, "I have been personally concerned by the notional losses arising to millions of long-term investors in Reliance Power, as a result of a dramatic adverse change in sentiment in global and domestic capital markets, subsequent to the pricing of our IPO.
''Though equity shares are by their very nature risk-bearing instruments, nevertheless, we have taken these one-time and unprecedented measures today, in demonstration of our philosophy of endeavouring to protect and enhance value for all our long-term
shareholders."
Based on the proposal for issuance of bonus shares, the paid up share capital of the company will stand increased to 239.7 crore equity shares of Rs10 each.
The Reliance Power IPO closed on 18 January 2008, receiving a record breaking response, with commitments of nearly Rs750,000 crore ($190 billion), from nearly 500 institutional investors across the globe, and 5 million retail investors.
The communiqué also said, that the company had a market capitalization of over Rs94,000 crore (over $23 billion) that ranked it among India's 10 most valuable private sector companies, and a net worth of nearly Rs14,000 crore, making it among the top five private sector companies in India on this parameter.