Concept Consultants

Reliance Anil Dhirubhai Ambani Group is planning to come out with an IPO of Reliance Power. 

They had filed the draft prospectus for its IPO in the first week of October. The IPO is understood to have secured the approval of SEBI with the condition of a 5 year lock-in clause for the promoters.

It is believed that the promoters are uncomfortable with this clause and that may delay the IPO a bit. Once this is sorted out, the IPO is expected to hit the markets soon.

On Tuesday, January 1, 2008, rating agency ICRA assigned an IPO Grade of 4 out of 5 (above average fundamentals) to the IPO. They came out with a release which said, “The grade assigned reflects the benefits arising out of being a part of the Reliance Anil Dhirubhai Ambani Group which has considerable experience across the value chain in the power sector and the expected cost competitiveness of most of the power projects in relation to the markets it proposes to serve. ”

“Further, the IPO proceeds would enable the company to tie up the equity funding for the first tranche of projects that it has identified.”, said the release.

“The grading assigned to the proposed IPO also takes into consideration the prospects for the power generation business in the country with increasing regulatory clarity, gradual emergence of a market for trading in power and improvement in financial position of some of the utilities in the state sector. “, the release added.

“The grading is, however, constrained by the implementation risks inherent in project implementation of the scale and magnitude being envisaged by the company and uncertainty on issues related to gas.”, the release clarified.

The market is very excited in anticipation of this IPO. It is also expected that retail investors may get a discount on issue price like the ICICI Bank Issue. We expect this IPO to be a good success with huge over-subscriptions.

IPO IPO, Reliance Power